Re "Yet more union meddling in local finances?" (Editorial, May 4):

Why would any local government want to rush into a bankruptcy filing? The city of Vallejo declared Chapter 9 more than three years ago and has become the national poster child for municipal bankruptcy.

Recently the New York Times highlighted the gravity of Vallejo's plight: 40 percent of the police and city workforce has been cut and 50 percent of the firefighters are gone. Fire calls need to be answered by neighboring departments and only the most serious crimes are investigated. Vallejo has even become a haven for prostitution. Time magazine characterized the influx as a "plague."

Now, after years of negotiations between unions, retirees, bondholders and unsecured creditors and more than $10 million spent on legal fees, Vallejo is finally hoping to reach agreements with its creditors. Even the city's lawyer called bankruptcy proceedings a "waste of time and money."

Filing for bankruptcy protection does not wipe the slate clean, especially when Chapter 9 has no teeth. The bankruptcy judge can't order a municipality to do much of anything. The judge can either dismiss the case or try to herd the creditors while the case is pending.

As a bankruptcy lawyer, I have seen families torn apart by bad financial decisions. As a former local elected official, I also know how difficult it can be to bring local groups together to find common ground. That is why I introduced Assembly Bill 506, which would require any municipality to engage in mediation with its creditors, employees and stakeholders before filing a bankruptcy petition.

California is one of only 10 states that allow municipalities to file for bankruptcy without first having some form of intervention. Under my bill, mediation would be required and would be facilitated by a specially-trained neutral third party mediator whose primary job would be to help parties identify alternatives to bankruptcy.

Unlike Chapter 9, mediation provides for constructive communication and an exchange of information. It allows all significant creditors and employee groups to devise a plan of rehabilitation without the costs of going through this process in a formal bankruptcy proceeding.

This new approach would not prohibit municipalities from filing Chapter 9, nor would it create a new bureaucratic system requiring state approval.

Vallejo council member Stephanie Gomes summed it up nicely: "It's best to negotiate your way out of the fiscal problem, before you go into bankruptcy." Municipal bankruptcy is no panacea. Mediation will provide a chance for better negotiations that protect our taxpayers and our communities.

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Assemblyman Bob Wieckowski, D-Fremont, represents the 20th District.

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