Okay, so maybe you aren’t so interested in an Algebra exercise, but we were wondering just what it is that makes people think that Assembly member Tony Mendoza’s AB 155 is a good idea?  The bill passed out of the Senate Local Government Committee this afternoon with three “aye” votes from Senators DeSaulnier, Kehoe, Price (Senators Cox and Aanestad voted “no”).  Local governments appeared in force to opposed the measure but, after relatively little debate, AB 155 was sent off to the Senate Appropriations Committee.

State Treasurer Bill Lockyer appeared before the Committee to support AB 155, citing a municipal bankruptcy’s impacts to the state’s credit rating and debt costs associated with local bankruptcies. He specifically noted that reports of a single city council member pondering the bankruptcy option in public resulted in additional costs to the state for its borrowing.  While what the Treasurer says may be accurate, it is clear that there is a lot more going on to influence the state’s borrowing costs.

The proponents, primarily the California Professional Firefighters and the California Labor Federation, also point to what goes on with other states, most of which do not authorize their local governments to seek bankruptcy protection (even though California counties are unique among their national counterparts in their fiscal structure and their service responsibilities.)  However, no one seems to be worried about what happens next for a community that is facing insolvency.  Testifying for local government opponents, Vallejo Mayor Osby Davis noted that if Vallejo had been forced to receive permission from the state before seeking bankruptcy protection and was not allowed to break its labor contracts, it would have been back before the state the following year, requesting the same permission, as their budgets simply could not afford to provide any community services other than public safety services for the near term.  AB 155 offers little, if anything, to help a community in fiscal distress.  Until the state is willing put put its money with its mouth is, the process managed by AB 155 is folly.

If you need help solving for “X” check out these articles: this Dan Walters column, and editorials from the Sacramento Bee and Riverside Press-Enterprise.

We will continue to press opposition on AB 155 with all senators and to the Governor and we urge you to do so too.  Don’t wait!