Local government advocates and organizations are up in arms over AB 1692. One of the best hopes for local governments facing insolvency could be eviscerated as Assemblyman Bob Wieckowski’s bill moves before the Assembly for a vote this week. AB 1692 would renege on nearly all agreements made during negotiations over last year’s AB 506.
AB 506 – a path for troubled municipalities to avoid bankruptcy – didn’t exist before September 2011. For the truly floundering governments, options were limited. However, a bill that was originally designed to encumber access to bankruptcy became a resource after rounds of negotiations between the League of California Cities, the California State Assocation of Counties, and other local government groups and Asm. Wieckowski , Senator Lois Wolk, and Governor Brown. Together, the parties created a bill that could help local governments resolve their issues outside of court.
According to Weickowski’s website:
AB 506 will save taxpayers money by requiring local governments to declare a fiscal emergency or enter into a neutral evaluation process with creditors before they can file for Chapter 9 bankruptcy. Passed with bipartisan support, AB 506 will help cities in dire financial straits to avoid costly legal fees, such as those incurred by Vallejo during its lengthy bankruptcy. It also maintains local control and flexibility unlike other states where state officials can come in and sell off a local community’s assets.
However, it appears Asm. Wieckowski has had a change of heart and introduced amendments to AB 1692 to undo the negotiations. Actually, according to testimony he gave before the Assembly Local Government Committee, he’d never intended to honor the compromises at all.
“AB 1692 is certainly bad policy,” wrote the League of Cities in its City Advocate on Friday.
“It’s imperative for the state and local governments to be able to work together effectively,” said Eva Spiegel, Communications Director for the League of California Cities. “Seeking to undo key parts of AB 506 just months after it was passed does not foster a culture of trust. The agreement on AB 506 was a notable compromise in the Legislature, because it had been preceded by three years of intense legislative battles. How can local governments be expected to effectively work with a legislature that can treat recent agreements and negotiation with such disregard?”
AB 506 received a great deal of notoriety and interest from across the state as both Stockton and Mammoth Lakes entered into mediation that was created by the bill.
The potential effectiveness of the mediation is a result of deadlines and neutrality. Cities and their creditors have either 60 or 90 days to resolve solutions to challenges and stave off insolvency and bankruptcy. The process is overseen by a neutral mediator, who facilities conversation and acts as a referee.
The changes proposed by AB 1692 would eliminate deadlines, providing no impetus to work quickly and diligently through challenges. Furthermore, it would replace the referee-like mediator with a judge-and-jury style arbiter.
It creates an atmosphere for delays, stalling tactics, and even worse – bankruptcy. It creates at the local level the same dysfunction that has become the hallmark of the State Capitol.
Time is essential and action is imperative to prevent the Assembly from going back on its word. The League of California Cities provided the following phone numbers for Democratic Assembly Members who need to hear from the local government community. They need to be told to vote no or abstain, but they should not support AB 1692.
Joan Buchanan (D-15)
District Office Phone Number: (925) 328-1515
Capitol Office Phone Number: (916) 319-2015