Amendments Spark AB 155 Activity
On Tuesday, August 24, the Senate Local Government Committee will hear the newly amended AB 155. The bill was amended last Friday to authorize a local agency to seek Chapter 9 federal bankruptcy protection under the following conditions:
With the permission of the California Debt and Investment Advisory Committee (CDIAC) and under its terms and conditions; OR
By overriding the decision of CDIAC; OR
Upon completion of a review of its financial position by the State Auditor.
This new option would authorize a local agency to request a financial review by the State Auditor. Once that review is complete and made public, the local agency would be free to exercise its ability to seek federal bankruptcy protection. Unfortunately, the time required for such a review may present a barrier to the fiscal protections offered by federal bankruptcy law. These delays could lead a local agency to default or closing its doors.
As a result, CSAC continues to have an “oppose” position on AB 155. In our view, the choice to seek bankruptcy protection is rightly placed at the local level and AB 155 still fails in its efforts to find an appropriate means to address a local fiscal crisis. Counties that agree should immediately contact their representatives in the Legislature and the Governor to let them know of their concerns.