A bill in the Indiana legislature would allow local governments to declare bankruptcy. Best of all, the bill gives an emergency manager the ability to renegotiate labor contracts, and approve or veto contracts, expenses, loans and hiring.

By Mike “Mish” Shedlock at Mish’s Global Economic Trend Analysis

EXCERPTS:

[From the courier-journal.com]:

“The emergency manager would have the power to cut the budget, renegotiate labor contracts, and approve or veto contracts, expenses, loans and hiring.

The bill states that if the emergency manager can’t turn around the local government’s finances, the unit would be allowed to seek federal bankruptcy protection.”

I salute this bill and look forward to the bankruptcy of a handful of Indiana cities. Gary has a population of around 100,000 and is Indiana’s fifth largest city. Lake Station has a population of about 14,000.

Georgetown, Indiana Headed for Bankruptcy

The Indiana Law Blog reports Southern Indiana town may file for bankruptcy protection

Hallelujah! Raising taxes to meet untenable union wages and pension benefits has to stop.

Criteria for “distressed” designation (one of eight needed):

• 1) Default in payment of principal or interest on bonds or notes
• 2) More than 30 days late on payroll or two consecutive payrolls missed
• 3) Failed to pay judgment creditors more than 30 days after judgment
• 4) More than 30 days late any of the following: sending taxes withheld from employees, sending employer or employee contributions to Social Security or Medicare, depositing minimum obligation payment to a pension fund
• 5) Accumulated a deficit in total government funds of more than 5 percent of current year revenues
• 6) Seeks renegotiation of payments owed that are more than 30 percent of annual revenues and more than 90 days overdue
• 7) The state is intercepting local government funds to make required payments
• 8 ) Uses interfund loans to support the same fund for two years in a row

Like Detroit, Central Falls is fiscally, morally, and educationally bankrupt. The one and only thing that makes any sense for Central Falls is to declare bankruptcy.

Please see Detroit Mayor Plans to Halt Garbage Pickup, Police Patrols in 20% of City; Expect Bankruptcy, Massive Municipal Bond Turmoil in 2011 for the problems Detroit faces.

FULL ARTICLE

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