In these tough economic times, should bankruptcy be an option for Illinois cities? It's not allowed now under state law, but State Rep. Ron Sandack (R-Downers Grove), the former mayor of Downers Grove, is sponsoring a measure to allow it.
I don't think there's any mayor, or any other leader of a local unit of government, that wants to be the person that brings their town into bankruptcy. That's not a badge of honor. It's the measure of last resort, he said.
Rockford Mayor Larry Morrissey says cities are in a bind. Like many other cities in the state, in particular many older, urban communities like ours, we face escalating costs, a decreasing tax base, and the impending risk of an enormous state LGDF (local government distributive fund) revenue cut, he testified at an Illinois House committee hearing on the subject. Morrissey serves as vice president of the Illinois Municipal League.
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He says some cities will be insolvent by next year, and bankruptcy allows cities and their employees, pension funds, bond holders and other creditors to haggle out a fair resolution, while keeping in mind that services such as police and fire protection, water and sewer, street maintenance and building permits and inspections must be maintained.
Witnesses before the committee discussed bankruptcies in Detroit and in Stockton and San Bernardino, Calif., but said municipal bankruptcies typically involve small cities or tiny governments like light districts or sewer districts.
In Illinois, the cities of Brooklyn and Washington Park, in 2003 and 2009 respectively, declared bankruptcy, and the judge accepted their petitions, not realizing there was no authority under state law.