Bankruptcy fights will put pressure on Prop. 13 reform

The supermajority of Democrats that is shaping up the state Legislature will have the power to do more than just put initiatives before the voters, they will have a veto-proof majority to make other changes.

At a post-election panel sponsored by Capitol Weekly and the University of California, Lou Paulson, president of the California Professional Firefighters, was asked, “what’s on the unions’ agenda?” He responded, “I think for us, one of the things we need to deal with is the issue of bankruptcy at the local government level and talk to the Legislature about trying to stop these local agencies and local governments from going into bankruptcy so easily.”

Legislation to make municipal bankruptcy more difficult was passed last year, but a subsequent attempt to put up even more hurdles died in the Assembly Rules Committee. The conventional wisdom at the time was that writing a love-letter to public employee unions while asking for a tax increase was not a great idea.

Now that the election is over and bankrupt San Bernardino has stopped paying into the California Public Employees’ Retirement System fund, preventing other cities from doing the same is likely to be an early agenda item for next year’s Legislature. When that happens, local governments will be in a bind: unable to declare bankruptcy and unable to raise property taxes to pay for their public pension obligations, the pressure for property tax reform will be greater then ever. It seems all roads lead to a re-examination of Proposition 13.

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