AB 506, sponsored by the California Professional Firefighters, undermines the benefits of federal bankruptcy protection by rendering the automatic stay of financial obligations meaningless by delaying the process of filing a petition with the court. Cities will no longer have the immediate “breathing space” necessary to formulate a debt readjustment plan. Most importantly, without immediate access to the bankruptcy court, the state is putting local services at risk.
Even with amendments recently added in the Appropriations Committee, AB 506 remains an unnecessary intrusion into a local government’s fiscal decision. Municipal bankruptcy has always been an option of last resort. Since the adoption of Chapter 9 of the Federal Bankruptcy Code in 1949, only two cities, and one county, in California have ever used the option.
AB 506 now heads to the Senate. The League continues to encourage cities to weigh in this bad bill. To view the League’s letter of opposition visit the League’s website and type “AB 506” into the search box. A sample opposition letter is also available.
AB 438 (Williams) was passed in the Assembly today. The controversial bill was amended on the Assembly floor on Wednesday and sets a dangerous new precedent by dictating the terms of public-private contracts and effectively prevents cities from contracting for library services to save money.
The League strongly opposed this bill because it ties the hands of local governments trying to maintain existing services with limited budgets. The League’s opposition letter is available on the League’s website by typing “AB 438” into the search box. A sample opposition letter is also available.
AB 438 now moves to the Senate for consideration by a policy committee, although it has not yet been assigned. Once it is assigned to a committee, the League will publish any action alerts in City Advocate Weekly.