CA Lawmakers Move to Shut Down Municipal Bankruptcies

California lawmakers are moving to deny the ability of cities and municipalities to file for bankruptcy, which would otherwise cleanse them of the bloated union contracts that have moved them deep into the red over the past decade.

"A bill that clamps down on municipal bankruptcy filings is headed for Gov. Schwarzenegger's desk, which is bad news for Los Angeles and other cash-strapped California cities.

It the governor signs Assembly Bill 155, it would place a hurdle in the path of filing for Chapter 9 municipal bankruptcy. The bill stipulates that a city may only file for bankruptcy with the approval of the California Debt Investment Advisory Commission, which provides information on debt to public agencies."

Of course, lawmakers are attempting to mischaracterize their efforts as simply an attempt to protect the public!

"California's taxpayers who rely on public safety, senior, park and library services, as well as those who own and operate businesses in our communities, deserve every effort that state and local government can make to avoid the long-term devastation of bankruptcy," the bill says.

Bankruptcy is simply a means to reorganize and eliminate burdensome liabilities. As a result, any city that files for bankruptcy could and would be able to continue fulfilling the same day-to-day activities that they were doing prior to the filing.

This latest action by legislators is simply an undisguised effort by California public unions to prevent their bloated, overly-generous retirement benefits from being scaled back in bankruptcy. Considering they were never fairly approved by the California public anyway, the effort to scale them back is reasonable on many fronts.

Mayor Vows to Re-Open Union Contracts

In a sign that some government officials are starting to understand what their recent fiscal woes are attributable to, Mayor Linda Thompson of Harrisburg, PA has recently vowed to 're-open' overly-generous union contracts.

"What Mayor Thompson won't stand by is the amount of overtime for public safety eating away at taxpayers' money. When it comes to snowstorms, floods and other emergencies in the city, the mayor says overtime is acceptable, not on a day-to-day basis though.

"What I am going to do is put the unions on notice that those contracts are going to get re-opened," said Thompson."

Harrisburg faces a $160m projected deficit over the next 5 years, and recently had its bond rating severely downgraded by Moody's.

Although Mayor Thompson should expect major resistance from entrenched union interests opposed to her move, the proposal is exactly the first step the city of Harrisburg should be taking to get their finances back in order. Drop her a note to show your support for her efforts.