It appears that there may be a political move to prevent cities from renegotiating union contracts in bankruptcy:
As California seeks more funds from its cash-strapped cities and counties to close a $21 billion budget deficit, some state legislators are pushing a plan that could compound municipalities’ pain by making it tougher for them to file for bankruptcy.
The bill would require a California municipality seeking Chapter 9 bankruptcy protection to first obtain approval from a state commission. That contrasts with the state’s current bankruptcy process, which allows municipalities to speedily declare bankruptcy without any state oversight so that they can quickly restructure their finances. The bill, introduced in January, has passed one committee vote and could reach a final vote by mid-July.
The bill was sparked by the bankruptcy filing last year of Vallejo, Calif., just north of San Francisco. Vallejo’s city leaders partly blamed work contracts with police and firefighters for pushing the city into bankruptcy, and won permission from a bankruptcy court in March to scrap its contract with the firefighters’ union.
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