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Highly controversial, union-backed legislation that would make it more difficult for local governments to declare bankruptcy has made it out of the Senate Local Government Committee after a nearly yearlong stalemate.

Assembly Bill 155 by Assemblyman Tony Mendoza, D-Artesia, was passed by the Assembly nearly a year ago, but was bottled up in the Senate Local Government Committee because one Democrat, Lois Wolk of Davis, refused to vote for it.

Senate President Pro Tem Darrell Steinberg removed Wolk from the committee and with the change, the measure was approved on a 3-2 party-line vote.

The measure, backed by public employee unions, would require local governments to get permission from the California Debt and and Investment Advisory Commission, which is dominated by Democratic officials with union ties, before filing for bankruptcy.

Local government groups oppose the measure, contending that it creates a mechanism for their unions to extract conditions, such as a pledge not to abrogate labor contracts, in any bankruptcy action. But proponents say that it's needed to prevent local governments from shunning their responsibilities via the bankruptcy court and damaging the state's already low credit rating.

The proposal popped up after the city of Vallejo filed for bankruptcy protection, citing labor costs that it could not maintain. Recession has eaten deeply into local government finances and a number have declared themselves to be in financial distress.

The bill's next stop will be the Senate Appropriations Committee. But with this week's Local Government Committee action, the measure is likely to land on Gov. Arnold Schwarzenegger's desk, where it faces an uncertain fate.

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