California: Municipal bankruptcy bill passes

Legislation designed to keep cities, counties, special districts and other public agencies from rushing into bankruptcy is headed to Gov. Jerry Brown after passing the Legislature Friday.

Assembly Bill 506 would bar local government agencies from filing for bankruptcy until they undergo mediation or hold a public hearing and declare a fiscal emergency threatening the health, safety or well-being of residents.

Assemblyman Bob Wieckowski, a Fremont Democrat, proposed the measure with support from the California Labor Federation and other union groups whose labor contracts could be jeopardized by local government bankruptcies.

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