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Thursday, January 13, 2011
Ind. Gov't. - Even more on: "Law would let cities declare bankruptcy
Updating earlier ILB entries, both Region papers have stories today on yesterday's committee hearing on SB 151.
Dan Carden reports in the NWI Times:
A state Senate committee heard two hours of testimony but took no action Wednesday on a plan intended to prevent local government bankruptcies.Jon Seidel of the Gary Post Tribune reports:State Sen. Ed Charbonneau, R-Valparaiso, said he will make adjustments to his legislation and ask the Senate Judiciary Committee to vote to send it to the full Senate in a few weeks.
"My objective coming out of this meeting was met. There was a lot of very thoughtful dialogue, thoughtful suggestions that we need to go back and take a look at," Charbonneau said.
Senate Bill 105 allows the legislative and executive branches of a local government to jointly ask a state board to appoint an emergency manager to take over that entity's finances.
The local government must meet one of eight financial criteria, such as defaulting on bonds or being more than a month late paying employees.
Charbonneau said his goal actually is to prevent bankruptcies -- by adjusting a distressed government's finances at the state level.
"If you go right to bankruptcy, you've lost all control at that point; it's now in the hands of a judge," he said.
Representatives of Indiana counties, cities, towns and schools boards told the committee they support the legislation in principle but asked that it spell out emergency-manager qualifications and pay.
They also questioned whether there ought to be a separate process for distressed school corporations. * * *
Under Charbonneau's proposal, supported by state Sen. Earline Rogers, D-Gary, and Gov. Mitch Daniels, a local government could declare bankruptcy if the emergency manager is unable to fix its finances.
Current state law does not allow local governments to use the federal bankruptcy program.
As written, the bill would let a local government or qualifying creditor petition a three-member Indiana Distressed Unit Appeals Board. That board would appoint an emergency manager to take on the powers of the executive and fiscal branch of that government and try to put a plan in place to resolve its financial problems.The DUAB could also send the unit of government into bankruptcy court, an option most agree is not available under current law.
But Charbonneau couldn't tell the Senate's judiciary committee how that manager would be paid, and speakers complained about the lack of qualifications laid out for such a person. A lobbyist for Indiana cities and towns pointed out no appeal process exists for a city sent to the DUAB by one of its creditors, and a school lobbyist asked whether a separate board should be created to deal exclusively with education. * * *
Karen Freeman-Wilson, who is running for Gary mayor, said Charbonneau's bill is aimed squarely at her hometown.
"This is a takeover by state government, which is very, very troubling," Freeman-Wilson said.
Charbonneau denies the bill is aimed at Gary. He began his remarks by saying it's "very unfortunate" the legislation has even been labeled a "bankruptcy bill," instead of one meant to help cities avoid that fate.
"I see it as a process that is to help the taxpayers in the city of Gary," Charbonneau said.
He later acknowledged the idea for the bill came to him while he monitored the DUAB's activities. Gary is the only city that has petitioned the board
The committee took no vote on the bill, and the chairman said a revised version will get another hearing.
Posted by Marcia Oddi on January 13, 2011 10:33 AM
Posted to Indiana Government