Vallejo Mayor Osby Davis delivered riveting testimony against AB 155 (Mendoza) during the Assembly Local Government Committee hearing on Wednesday, April 22. Opposed by the League, this bill would give a state commission without expertise in this area the authority to determine whether or not a local entity could file for bankruptcy. The League opposes AB 155 because it removes the fundamental decision making power of local communities.

Sponsored by the California Professional Firefighters Association, the hearing on AB 155 was packed. Supporters of the bill argued that local governments will wrongfully use bankruptcy as a means to obstruct employee contract negotiations. The City of Vallejo’s bankruptcy filing in 2008 was the focus of much of the discussion in the Assembly Local Government Committee hearing.

Cities finding themselves in dire financial positions would have another hurdle that could block their use of federal bankruptcy with the provisions of AB 155. Since 1949, only three municipalities in California have filed for Chapter 9 bankruptcy protection. AB 155, as written, overlooks the immediate debt relief necessary in a fiscal crisis as provided under Chapter 9, which could pose major problems to local agencies.

Mayor Davis told the committee that he ran for office understanding that Vallejo faced some very serious fiscal challenges including the potential for bankruptcy. The mayor expressed his commitment to not just Vallejo but the city’s employees who are responsible for delivering vital services to residents. “I am concerned about the totality of our city, concerned about paving our streets, libraries, senior citizens. We had no reserve, we still have no reserve,” said Mayor Davis.

AB 155 passed out of the Local Government Committee on a four-to-three vote and now goes to the Assembly Appropriations Committee. The members who voted for the bill are: Assembly Member Anna Caballero (D-Salinas), Assembly Member Mike Davis (D-Los Angeles), Paul Krekorian (D-Burbank) and Nancy Skinner (D-Berkeley).

The League wishes to thank the Assembly Members who voted against this bill. Those members are: Juan Arambula (D-Fresno), Stephen Knight (R-Lancaster) and Mike Duvall (R-Brea).

Assembly Member Juan Arambula (D-Fresno) commented that he had received an overwhelming number of letters in opposition to AB 155 from his district and contended that he could not support the bill in its current form. Although Assembly Member Mike Davis (D-Los Angeles) voted for the bill, he said he did so with reservations. He said that he is concerned that the state may be held liable to creditors in the event that the agency charged with this task (the California Debt and Investment Advisory Commission) denies a municipality its request to file bankruptcy.

Along with Mayor Davis, a number of other city officials came to the Capitol Wednesday to testify against AB 155, including Loomis Council Member Miguel Ucovich, Roseville Council Member Jim Gray, Colusa Council Member Kay Hosmer, and Paradise Council Member Woody Culleton.

Take Action!

City officials are urged to send in letters of opposition to their legislators and to the office of Gov. Arnold Schwarzenegger. A sample letter can be found on the League’s Web site. Type “AB 155” into the search function to locate the letter.

City officials with additional questions can e-mail Natasha Karl, League legislative analyst or Dwight Stenbakken, deputy executive director.