Los Angeles Mayor Antonio Villaraigosa's threat to shut down city government two days a week because of a looming shortage of cash fizzled when city officials suddenly discovered an additional $30 million in property taxes.
Nevertheless, Los Angeles' financial woes are emblematic of a widening crisis in California's 5,000 units of local government as they deal with flattening or even declining property and sales tax revenues, reduced and/or delayed payments from a deficit-wracked state budget, and burgeoning costs. And if their pinch continues, which seems highly likely, some probably will wind up in bankruptcy court.
One city, Vallejo, is already there, having foolishly squandered windfalls of property and sales taxes on unsustainable contracts for its police and firefighters. And the prospect that more public entity bankruptcies could follow is unsettling to public employee unions, who fear their salary contracts and/or pension benefits could be abrogated.
Last year, the unions' allies in the Legislature's Democratic majority pushed legislation that would indirectly give unions a veto power on local government bankruptcies, or at least the power to extract concessions from local officials.
It would do so by requiring insolvent local governments to get permission from the otherwise obscure, nine-member California Debt and Investment Advisory Committee - a committee dominated by union-friendly Democrats - before seeking bankruptcy protection.
Supposedly, it's a good government measure to guard against unjustified bankruptcies. In reality, it would give unions more power over local governments because the committee could either block bankruptcy or compel insolvent agencies to maintain their labor contracts as a condition of filing for bankruptcy.
The measure, Assembly Bill 155, sailed through the Assembly and seemed headed to Gov. Arnold Schwarzenegger's desk (and an uncertain fate) until it stalled in the Senate Local Government Committee as local governments ramped up opposition pressure.
AB 155, by Democratic Assemblyman Tony Mendoza of Artesia, a former teacher and union activist, needed three votes in the five-member committee. But Democratic Sen. Lois Wolk, a former Yolo County supervisor, refused to vote for it, thus blocking approval.
The bill is still sitting in the committee, but the panel has undergone a structural change. Senate President Pro Tem Darrell Steinberg elevated one of the two Republican members, Dave Cox, to the chairmanship, replacing an ailing Democrat, Patricia Wiggins. But he also removed Wolk and appointed two new Democratic members, Curren Price and Mark DeSaulnier, who support the bill. DeSaulnier, in fact, carried a virtually identical measure himself.
With a hearing on the bill scheduled for later this month, it's now near-certain that it will make it to Schwarzenegger's desk.
