Having driven the state to the brink of bankruptcy, legislators are now moving to make it more difficult for California's cities and counties to put their shaky fiscal houses in order.
Assembly Bill 155 by Assemblyman Tony Mendoza, D-Artesia, would make it harder for local governments to seek bankruptcy protection. Among other things, bankruptcy protection allows governments to get out from under labor contracts approved in the good times that they can no longer afford in economic bad times. The motivations of the powerful state firefighter unions, the principal backers of this bill, are apparent. They want to block local governments from setting aside overly generous pay and benefit increases.
AB 155 would require cities, counties and special districts seeking bankruptcy protection to first get approval from the California Debt and Investment Advisory Commission. The commission is a creature of the state and dominated by legislative leaders. So AB 155, in effect, gives the state the power to decide which local governments can seek bankruptcy protection and when they can do so. It is, as its opponents have said, "an unwarranted and unjustified intrusion on local control."
Far from protecting the state and other jurisdictions from the potential negative spillover effects if one local government seeks bankruptcy protection, AB 155 may actually put the state at great financial risk. As an Assembly committee analysis of the bill says, it could "create the implication that the state has assumed responsibilities for the debts of the distressed municipalities" whose bankruptcy protection filings are denied or delayed.
To deal with the economic crisis they face, cities and counties need the ability to modify labor contracts. If local governments cannot persuade unions to voluntarily agree to concessions and are also prevented from seeking bankruptcy protection, their only recourse will be widespread layoffs and dangerously brutal cuts in government services.
That's the real danger the public faces, and AB 155 magnifies that threat.
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