On Monday, California’s Senate Appropriations Committee heard Assembly Bill 155 by Assembly Member Tony Mendoza. The committee referred the bill to its Suspense File, for consideration together with other legislation of significant state cost.  On Thursday, the committee will vote to either hold AB 155 or pass it to the Senate Floor.

AB 155 undermines the ability of local governments to manage their local finances by requiring municipalities, including special districts, to gain permission from a state commission before filing for federal bankruptcy protection.

AB 155 received last minute amendments late last week. The amendments do nothing to remove CSDA’s opposition.

The amendments add an override provision that allows a local entity to approve a resolution to override the California Debt Advisory Commission’s (CDIAC) denial of a request to enter bankruptcy. However, the override is only available if CDIAC denies a request. There are two major flaws that should be pointed out regarding the override provision:

1. If CDIAC denies a local entity’s request to enter bankruptcy, AB 155 allows CDIAC to charge the local entity for the costs associated with making the findings and conducting the hearing. This seems absurd given the reason why a local entity seeks bankruptcy protection and would only strain the municipality’s finances further.

2. AB 155 still allows CDIAC to approve a request with conditions (page 3, line 38 through page 4, line 2), in which case the local entity would not have access to the override provision to challenge the conditions imposed on the local entity.

We need your help! If the bill moves off the Suspense File later this week, it will be eligible to be voted on by the entire Senate on Tuesday, June 1. Send an oppose letter today and follow up with a phone call to your Senator. Sample letters and more information like the full text of the bill, can be found on CSDA’s Grassroots Action Center.

Don’t delay! Your action is necessary to stop this bill from moving forward! Senators need to hear from their constituents, you, about how this bill will negatively affect local governments.

Visit CSDA’s Grassroots Action Center today! CSDA’s Grassroots Action Center allows all special districts to research and act on the most important and pressing issues facing special districts.