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Saturday, May 01, 2010

Ind. Gov't. - "Governor: Bankruptcy law needed in case cities fail "

Jon Seidel of the Gary Post Tribune has this report this morning. Some quotes from the long story:

Gov. Mitch Daniels said Friday it might be time for Indiana to pass a municipal bankruptcy law in case Gary or another insolvent Hoosier city fails to prevent financial ruin in the future.

Such a law is a requirement for any city interested in pursuing bankruptcy, and he said it shouldn't harm Indiana's AAA credit rating, one of the best in the country.

However, Daniels said he still hopes Northwest Indiana's largest city will be able to right its financial ship by developing the Gary/Chicago International Airport or a land-based casino. He even praised Gary City Hall for slashing its tax levy by 24 percent since 2008 with the help of the Indiana Distressed Unit Appeals Board.

"That's not easy to do even as you start, as they did, in a position of lots of excess," Daniels said. "That takes some gumption on somebody's part."

The governor made his comments while meeting with the Post-Tribune editorial board Friday.

The ILB recalls this long entry from July 27, 2009 headed "Southern Indiana town may file for bankruptcy protection," where Herald J. Adams of the Louisville Courier Journal reported:
Facing a debt of $1.45 million over a long-delayed sewage plant project, the Floyd County town of Georgetown has taken the first step toward what would be an unprecedented move for an Indiana municipality — filing for bankruptcy protection.

Whether Georgetown could do that, however, is in dispute. State officials say Indiana law doesn't authorize a town to declare bankruptcy.

Georgetown's leaders “have no authority” to declare the town bankrupt, said Brian Bailey, general counsel for the Indiana Department of Local Government Finance.

Bailey cited a 1994 update to the federal bankruptcy code that says a municipality “must be specifically authorized” by state law to be a debtor, and no Indiana law does that. (Kentucky law authorizes its local governments to file for bankruptcy, but none have ever done so.)

Posted by Marcia Oddi on May 1, 2010 09:48 AM
Posted to Indiana Government