Union bill would block city bankruptcies

MAY 25, 2010

By KATY GRIMES

A union-backed Assembly bill, authored by Assemblyman Tony Mendoza, D-Artesia, would potentially prevent financially destitute California cities from filing for federal bankruptcy protection under Chapter 9 of the bankruptcy code.

Mendoza’s bill would give the California Debt and Investment Advisory Commission, a state agency, the ability to deny any municipal bankruptcy filing, instead of allowing the city (or municipality) in question to make the decision. Intruding further into local politics, the commission could make the city keep all labor contracts in tact, as a condition of a bankruptcy filing, virtually nullifying the need for bankruptcy.

AB155 was heard in the Senate Committee on Appropriations Monday, but the committee referred AB155 to its suspense file.

AB155 was approved by the Senate Local Government Committee last month, but local governments and local government groups strongly oppose the measure. Opposition to the bill is not only fiscal in nature, it appears to be centered on the state deferring to unelected, union represented state employees to make decisions for California’s cities. This blatant conflict of interest appears not to matter to union-backed Democrats in the Legislature.

As telling as the bill’s union backers, so are the opponents of the bill, including the cities of Napa, San Bernardino, Sacramento, San Diego, Long Beach, West Hollywood, San Jose, Mammoth, Lake Forest, Berkeley, Salinas, as well as many of the state’s counties including Monterey and Riverside counties. Each of the cities and counties represented at the committee hearing expressed vehement opposition to the overreaching control by the state.

The California Chamber of Commerce and the Howard Jarvis Taxpayers Association (HJTA) were present in opposition as well, as was the Urban Counties Caucus, the State Association of Counties, the Regional Council of Rural Counties and the League of California Cities.

HJTA’s President, Jon Coupal recently expressed taxpayer opposition to AB155: “Bargaining with yourself works out well, right up until the point when the private sector can no longer afford these extravagant demands. Then your government benefactors become your enemies.”

Ballotpedia lists AB155 author Mendoza’s contributors as the California State Council of Service Employees, California Teachers Association, California State Council of Laborers, the California Association of Realtors, and the Southwestern Regional Council of Carpenters.

15 comments

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  1. EastBayLarry
    EastBayLarry 25 May, 2010, 17:55

    No city or county is going to declare bancruptcy, except as a last resort. So what happens when the last resort is prohibited? Can a city or county just cease to exist? Become ‘unincorported’?

    No, they will be bailed out by the state, adding to the states’ unsustainable debt.

    Reply this comment
  2. marcia fritz
    marcia fritz 27 May, 2010, 08:08

    The unions are color blind and will control whoever is in charge. Don’t blame the Democrats, blame the system. Until we stop the flow of union political contributions to those in power, the greed and undue influence will continue.

    Reply this comment
  3. OCO
    OCO 28 May, 2010, 06:37

    Marica is correct, BOTH parties are to blame for this mess…..and in fact the ONLY diffeence is one party is tax and spend the other borrow and spend.

    Reply this comment
  4. Michael Fuss
    Michael Fuss 28 May, 2010, 06:58

    Consider our proposed consitutional amendment that gives the voters the right to decide on public employee contracts. The initial draft can be seen at:
    http://cavoteonpublicemployeepay.org/
    It is now being put into legal form at the legislative counsel in Sacramento. If we get it on the ballot it will take away the conflict of interest that elected officals have when deciding on public employee contracts becuase the voters would be the only ones to retain the right to apporve.

    Reply this comment
  5. SkippingDog
    SkippingDog 28 May, 2010, 08:57

    Since any municipal bankruptcy proceeding would ultimately shift significant sunk costs to the state, please explain to me why the state should not have some oversight and control of the decision. Cities and counties are merely political subdivisions of the state anyway, so it is really more surprising that they have had the ability to unilaterally make such decisions in the first place.

    Reply this comment
  6. BIll
    BIll 28 May, 2010, 09:03

    Michael, while I applaud the efforts to make the initiative I can’t help but be pessimistic.

    While we have some good props that have passed (Prop 13), most of these things are won or lost on TV. Most voters don’t read them or understand them. Therefore the one with the most money to spend on propaganda wins. The unions will spend millions to win the propaganda war.

    CA is on tract for an complete collapse. Whether the Feds bailout out the state is irrelevant. The bankrupt bailing out the bankrupt is nothing more than kicking the can down the road.

    Reply this comment
  7. SkippingDog
    SkippingDog 28 May, 2010, 12:04

    Bill –

    Even Prop 13 had a number of unintended consequences, chief among them the shift of nearly all government financial authority from the local to the state level. Many of our current problems directly result from the direct democracy choices made through the California initiative system — review Prop 98 if you’d like more details. It makes no sense to have elected officials if we don’t trust them to make decisions on our behalf, though I agree that the system needs many reforms. Neither unions nor business interests like the Chamber of Commerce should be able to buy the legislation they want for their memberships.

    Reply this comment
  8. joel
    joel 29 May, 2010, 12:25

    Is it not obvious that the basic problem is corruption? Legal corruption is just as bad,if not worse, than illegal corruption.

    Look, just follow the money. Then you will understand. Don’t blame “direct Democracy.” Blame the self servers who perverted this system.

    BTW, I am lovin’ this. Watching these corrupt people screaming how unfair things are and all. I now don’t care how much money the politicians and the unions steal. This system is done.

    Reply this comment
  9. SEESAW
    SEESAW 30 May, 2010, 15:16

    Michael, If you have the resources available for putting up the two million dollars you will need to get your initiative on the ballot–then more means for coming up with the 50-60 million dollars you will need to get it passed, it seems like you would be much better off just finding other ways to fight your $600 traffic tickets.

    Reply this comment
  10. SEESAW
    SEESAW 30 May, 2010, 16:11

    More, Michael: I just saw on the TV News today, that a CA Legislator has introduced a bill to cut the right-turn on red-light ticket fines down to $250. Might be worth your time to follow up on the details.

    Reply this comment
  11. StevefromSacto
    StevefromSacto 1 June, 2010, 15:49

    “Neither unions nor business interests like the Chamber of Commerce should be able to buy the legislation they want for their memberships.”

    You’re missing the point, SkippingDog. You see, it’s OK for the Chamber of Commerce, PG&E, Mercury Insurance, and others…aka “the people”, to buy as much legislation as they want. And if they can’t buy it in Sacramento, they buy it at the ballot box. But OMG, let working people dare to do the same things through their unions and all hell breaks loose.

    If the unions in our state were as powerful as the right wing makes them out to be, our educational system and public services would again be the envy of the nation, we would have had health care reform long before President Obama, and our legislature wouldn’t be in gridlock.

    Reply this comment
  12. StevefromSacto
    StevefromSacto 1 June, 2010, 15:52

    Oh, and by the way, let’s welcome Marcia Fritz to the Wailing Wall. I assume this is the same Ms. Fritz who worked with Keith Richman a few years back to deny survivor benefits to the widows and widowers of police and firefighters killed or injured in the line of duty. I guess some things never change.

    Reply this comment
  13. SkippingDog
    SkippingDog 2 June, 2010, 08:36

    Steve – You make some excellent points and I stand corrected, at least in part. Even though I am a retired peace officer with over 31 years of service in this state, I have been bothered by the exponential growth of the prison-industrial complex and CCPOA. Although corrections officers perform an important and dangerous job, there’s absolutely no justification for paying them at the same level as CHP officers and DOJ agents. That’s the union influence I was referring to.

    I fully agree that government employee unions and associations are not remotely as powerful as the nut fringe paints them, but it’s always in their interest to peddle fear through the creation of evil straw men. Republicans sell fear – always have, always will.

    Reply this comment
  14. SkippingDog
    SkippingDog 2 June, 2010, 08:38

    Marcia Fritz is just another tool. She’s probably active in the Club for Growth and 9.12 as well.

    Reply this comment
  15. Fulcrum Financial
    Fulcrum Financial 3 February, 2011, 13:27

    Thank you for this enlightening post. The points you raise regarding the AB155 show true insight into a pressing issue of today. Here’s an alternate perspective on AB155 for your viewing. Enjoy!

    Reply this comment

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