Bankruptcy Bill Violates Rule

Katy Grimes: News comes from the Senate today that AB 155, the union-backed bill preventing cities and municipalities from filing for bankruptcy protection – has been held in Senate Appropriations after Vice Chairman Sen. Roy Ashburn called the Democrats out on a technical violation of the Joint rules.

The Secretary of the Senate was called in and confirmed Ashburn’s concern, and the  the bill could not be acted upon.

So what does this all mean?

According to Capitol sources, procedure dictates that Democrats will now have to amend the bill to include an appropriation. Sources do not think they can get the rule wavier if it’s a two-thirds requirement.

AB 155 bill violates Joint Rule 37.4(b), which states “Any bill requiring action by the Bureau of State Audits shall contain an appropriation for the cost of any study or audit.”

Just this past Wednesday, AB 155 was amended to include allowance for an independent review by the California State Auditor before a local government agency could pursue bankruptcy.

But by making a reference to the State Auditor in the amendment, committee Vice Chairman Senator Roy Ashburn, R – Bakersfield, was able to question the propriety of considering the bill, invoking Joint Rule 37.4.

To contain an appropriation such as this, would increase the vote threshold required for the bill to pass to the Governor from a simple majority to two-thirds of the entire Legislature.

Because Republicans oppose this bill, and Republican support is needed to pass the two-thirds threshold, insiders say the bill will not be amended to contain such an appropriation.

Proof of this is in the fiscal estimate from the Republican analysis: “This bill could result in increased workload and costs for the Bureau of State Audits (BSA) to audit the analyses and financial position of a local public entity under the alternative process.

BSA estimates increased costs ranging from $150,000 to $225,000 for each city that chooses the option for BSA to audit financial position.  A really small city may be less than $150,000, but most would fall within that range.”

posted Aug. 27, 2009