Assembly Bill 155 (Mendoza) would authorize the California Debt and Investment Advisory Commission (CDIAC) as a filter for municipalities to go through before filing for bankruptcy – originally created to provide information and technical assistance about debt issuance to public agencies and other public finance professionals.
AB 155 essentially died when Tony Mendoza capitulated in a Senate Local Government Committee hearing and refused to take his bill up for a vote because it didn’t have the support to pass, and now it’s back with a vengeance, disguised in a completely different bill.
In what is known as a gut and amend, labor unions are using language similar to that of AB 155 and inserting it into SB 88 (DeSaulnier) in a less than transparent manner, mangling the democratic process and oversight through a gauntlet of trickery and allegiance. A rose by any other name would smell as sweet.
If SB 88 passes, CDIAC would have the authority to establish conditions, limit or deny changes to labor contracts. This is if CDIAC approves the request for a municipality to file for bankruptcy.
CDIAC is being sold by labor unions as an added measure of economic security for municipalities to weave through, claiming municipalities will file for and abuse bankruptcy to get out of honoring union contracts.
The great bamboozle with CDIAC, which consists of the State Treasurer, the Governor or the Director of Finance, the State Controller, two local government finance officials, two Assembly Members, and two Senators, and a bankruptcy court is that a bankruptcy court isn’t beholden to political influence or to particular group. Neutrality should dictate municipal bankruptcy, not political agendas.
The labor unions evidently aren’t going down without a fight, and that means there will be some hucksterism in the last days of the legislative session. In the wise words of Hunter S. Thompson, “Only losers play fair.” and moderately decent fiscal policy is at stake.
SB 88 was chosen by the labor unions to insert the language of AB 155 into because SB 88 has already been through most of the legislative process; it has been amended and is now eligible for a vote on the assembly floor.
Why this is so important for the public safety and labor unions throughout the state, because this bill will provide labor unions more control over municipalities finances and make permanent union contracts, should municipalities go bankrupt. This leaves public safety unions unscathed and immune to economic realities, and perpetuates unsustainable fiscal policy within each municipality.
It is arguably the most important bill for labor unions this legislative session and thus the most important bill municipalities as well in order to maintain the little control they already have over their finances.
In a phone conversation today with Dwight Stenbakken the Deputy Executive Director for the League of California Cities he noted that, “Unions want to stop a local government from breaking a collective bargaining contract with them.”
Consider the raid of cities’ coffers by the state to the tune of $3.7 billion to close the budget gap. The state of California will borrow $2 billion from cities and counties and $1.7 billion from local redevelopment agencies.
In a press release from the LOCC on May 5 it states that this raid by the state, “will threaten the safety of every Californian…For most cities police and fire protection make up 60 – 80 percent of their budgets.“
This legendary raid and the possible implementation of CDIAC increases the probability of cities filing for bankruptcy and on top of that make it much more difficult to file for bankruptcy protection.
The fate of the labor union bill is even more precarious. Substantial changes to a bill that are as monolithic as SB 88, Assembly Rule 77.2 states that the speaker can refer the bill back to a policy committee to be heard, if Assembly Rule 77.2 is invoked.
Just this afternoon the bill was passed off the Assembly floor and is being sent back to the Senate.
According to Stenbakken it is unlikely that the bill will be sent back to a committee since Senator Pat Wiggins (D-Santa Rosa) decides whether or not that happens as the Chair of the Senate Committee on Local Government, she also happens to be a coauthor of AB 155.
The bill could be heard as early as this evening but its more likely to be heard tomorrow.
Last Friday was the last day to amend bills, that same day a floor alert was sent by the LOCC to the legislators in both houses warning of the gut and amend to SB 88.
SB 88 opens the door for labor union abuse of contracts while hijacking the taxpayer unnecessarily for their insatiable demands.
Another interesting twist and not without heavy doses of irony is that Mark DeSaulnier the author of SB 88 was appointed by Darrell Steinberg to chair the legislative committee in charge of examining reform of the legislative process.
A recent press release from Speaker Bass’s office outlines the Joint Select Committee’s responsibilities including making government more transparent and accessible from around the state, diminishing the influence of special interests.
The fox is officially guarding the chicken coop and dusk is approaching.