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Monday, January 24, 2011

Ind. Gov't. - Continuing on with: "Law would let cities declare bankruptcy

As I wrote here yesterday, "The ILB has had a number of entries on this year's SB 105, a bill that would allow Indiana municipalities to file for bankruptcy under defined conditions."

Today Jon Seidel of the Gary Post-Tribune has a very long entry headed "'Municipal bankruptcy bill' not about Gary, author says." The story begins:

People in Gary are pretty worried about Senate Bill 105. That's the bill by Sen. Ed Charbonneau labeled a "municipal bankruptcy bill" early in this year's legislative session. Charbonneau says that label is unfortunate, because the whole point of his bill is to prevent local governments from going bankrupt.

But it does create a path to municipal bankruptcy court for Hoosier governments that doesn't exist now.

The general sentiment at the Statehouse is that the bill was filed this year because Gary's money problems are coming to a head. Charbonneau says that's not the case. But Gary is in the midst of its third petition to the Indiana Distressed Unit Appeals Board, a body that helps by raising local tax caps.

The DUAB can't do that next year because the caps were voted into the state constitution, and it's not clear if the region's largest city can survive on its own.

So Charbonneau's bill would reform the DUAB. Financially troubled governments would petition the board if they can't pay their bills. If the new DUAB decides the government is distressed under a set of pre-established guidelines, the DUAB would appoint an emergency manager to help straighten out its financial problems.

That resolution could include a Chapter 9 bankruptcy filing, but Charbonneau says the point is to try and avoid that fate.

Politicians in Gary say the bill amounts to a state takeover of their city.

The lengthy story concludes:
A second hearing has been set for 8 a.m. (CST) Wednesday at the Statehouse. Charbonneau said changes will be made to the bill, but he wouldn't give any sneak previews.

"I'm very optimistic that we'll have something that will alleviate most people's concerns," Charbonneau said.

ILB: The bill will be heard, for amendment only, by the Senate Judiciary Committee, on Wednesday, Jan. 26th. The meeting starts at 9:00 am EST in Room 130. A number of other bills of interest are also scheduled for that meeting. You can watch video from Room 130 here, but the videos are not archived for watching later.

Posted by Marcia Oddi on January 24, 2011 09:33 AM
Posted to Indiana Government