Assemblymember Bob Wieckowski has a bill he says will help avert municipal bankruptcies. But apparently cities don’t like it one bit.
First, here’s Wieckowski’s press release:
ASSEMBLY LOCAL GOVERNMENT
PASSES BILL AIMED AT AVERTING
SACRAMENTO – A bill by Assemblymember Bob Wieckowski (D-Fremont) to help fiscally-strapped municipalities avoid the myriad problems associated with bankruptcy, such as in the case of Vallejo, was approved today by the Assembly Local Government Committee 5 to 3. The bill, AB 506, would establish a mediation process to allow a fair resolution among all creditors and the struggling municipality. It will now head to the Appropriations Committee.
“If you look at the toll that has resulted from the city of Vallejo’s bankruptcy filing, it is little wonder why some associated with it say you have to be crazy to pursue bankruptcy,” said Wieckowski, a former Fremont City Council member and a bankruptcy attorney. “Three fire stations were closed, 40 percent of the police officers were let go, the number of firefighters were substantially reduced and about $10 million and climbing was spent on legal fees. Now the city is recognized in Time Magazine for bankruptcy and prostitution.”
Wieckowski’s bill would permit bankruptcies only after municipalities have entered into mediation with its creditors and stakeholders. A specially-trained neutral third party mediator chosen by the municipality and stakeholders would work with the parties to forge a resolution. The bill seeks to avert bankruptcy and provide a process to make debt restructuring efficient and more cost effective than a long, drawn-out bankruptcy case.
“This legislation is designed to get all parties to negotiate in good faith toward a common consensus with an independent, trained mediator leading the way,” Wieckowski said. “Taxpayers are the big losers from municipal bankruptcies because of the extensive legal fees, and rising borrowing costs. A bankruptcy should be the absolute last resort and only after vigorous negotiations by all the stakeholders. This is a work in progress and I look forward to continuing the conversation with municipalities to improve the bill.”
Now click here for a Sacramento Bee editorial opposing the bill as a gift to public employee unions: