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Mounting Opposition on Bankruptcy Bill as Deadline Approaches

May 25, 2012

AB 1692 (Wieckowski), the newest municipal bankruptcy bill, was held on the Assembly floor this week after mounting opposition from local governments and statewide media.

 

However, the League anticipates AB 1692 will be taken up for a vote sometime next week before June 1, which is the last day for bills to be passed out of the house of origin.

The big 10 mayors expressed their opposition in a joint letter to the Legislature this week, saying that the agreement reached last year in AB 506 should be given a “fair opportunity to work”.

AB 1692 reverts back to concepts advanced in earlier versions of last year’s AB 506 which local governments strongly opposed including:

  • Removing the terms “mandatory mediation” and “mediator” as terms that describe the neutral party. This was pivotal to addressing the League’s concerns in the final agreement on AB 506.
  • Empowering the evaluator with arbitrator-like independent decision-making authority. These powers were removed as part of the final agreement on AB 506.
  • Changing the circumstances in which the parties agree to continue in mediation, by removing the required concurrence by the affected public entity. The ability for parties to trigger delays was a major concern with earlier versions of AB 506. The May 5 amendments to AB 1692 have been represented by the author as removing this provision, but the amendments removed only one of the two applicable provisions in the measure.

Numerous media outlets have published concerns through recent editorials. A few of the editorials include:  

 AB 1692 is certainly bad policy. Moreover, it contributes to the atmosphere of distrust between local governments and the state, calling into question the validity of future local-state negotiations on this and other matters.

The League encourages cities to continue their opposition to AB 1692 and will provide an update on the bill as it becomes available. The League’s opposition letter and a sample letter are available on the League’s website by typing “AB 1692” into the search box. 



 
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