Examiner Editorial: Politicizing state bankruptcy laws won’t work

What happens when there’s no money left for the government to spend? That’s what cities and counties in California are about to learn. A bill under consideration in the state Senate would require local governments to check with the state before filing for bankruptcy.

Supported by public-sector unions as a way of protecting their members from the consequences of California’s catastrophic government spending binge of the past decade and the current economic downturn, it uses national taxpayers as human shields.

Rather than use bankruptcy as a way of providing debt relief to failing local governments, giving veto power to the California Debt and Investment Advisory Commission turns what should be an impartial process into a political football. Whereas the law would be applied to all cities across the board, the bill would allow CDIAC to pick and choose which cities receive permission to file.

And why wouldn’t it? The commission isn’t comprised of judges, but instead includes the governor or state director of finance, the state treasurer, the state controller, two state senators, two state Assembly members and two local government representatives, one from a county and one from a city. In other words, forget about city autonomy from the state. And especially forget about due process for creditors in bankruptcy law.

Due process isn’t the point, of course. As Carroll Wills of the California Professional Firefighters union put it to the Sacramento Bee, the measure is “about the fact that there are many local agencies legitimately in crisis, but there are also local agencies that, for whatever reason, might be looking for a way out [of labor contracts].”

But what else is a city supposed to do when its budget is under water? Yet for these special interests, protecting labor contracts is the first concern and the cities’ ability to pay comes second. What do public-sector unions have to gain if these governments find themselves unable to make payroll? Easy: Turn to Uncle Sam for a bailout.

Such a power grab is all that’s left for California politicians wholly unwilling or incapable of confronting the massive deficits they have compiled and cutting state spending. When the relationship between government and special interests becomes this clearly parasitic, it’s important to realize this fact: The host dies. There is a message there for Congress, too.

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