AB 506 was declared a danger to local governments on this site and in the declarations and publications of various local government agencies. And though the vigilant efforts of that coalition of opposition, AB 506 was amended and its dangers abated. Instead, the AB 506 passed by the Senate Governance and Finance Committee is workable and a triumph of compromise and negotiation.

The original bill, which resulted from the Vallejo bankruptcy three years ago, would have required municipalities to pass through a state-mandated mediation program before earning permission before declaring bankruptcy.

However, the amendments approved allow a second avenue. After holding a public meeting, a city can declare fiscal emergency and then proceed to consider bankruptcy.

From the Sacramento Bee:

A years-long and often sharp political duel over whether the state should control local government bankruptcies was resolved Wednesday with an apparent win by local officials over unions.

The Senate Governance and Finance Committee, by a 7-2 vote, approved a much revised bill, Assembly Bill 506 by Assemblyman Bob Wieckowski, D-Fremont.

As now written, AB 506 would allow a city or other local government to declare bankruptcy without state permission if it goes through a “neutral evaluation process” of its finances or declares a “fiscal emergency” after a public hearing.

Read the full article here.