SAN FRANCISCO - A bill that would make it tougher for California municipalities to declare bankruptcy passed the state Assembly last week and now moves to the Senate.

The labor-backed bill has drawn protest from bankruptcy lawyers, local government groups and investors, who say it would make it harder to resolve a distressed municipality's financial woes and would effectively ban municipal bankruptcy. Public employee unions are pushing the bill in reaction to Vallejo, Calif.'s bankruptcy, which has allowed the city to slash worker pay to balance its budget.

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