A bill that would change California’s municipal bankruptcy law again appears to have stalled without support from the Democratic majority leadership in the state Senate.

Senate President Pro Tem Darrell Steinberg said Tuesday he has no plans to refer Assembly Bill 1692 to a committee in the final weeks of the legislative session.

Steinberg said the Legislature doesn’t need another debate on municipal bankruptcy while it is trying to tackle pension reform, according to his spokesman, Mark Hedlund.

“We’re trying to accomplish pension reform and that’s where we want the focus to be and not on something that is a distraction,” Steinberg said.

AB 1692 has been sitting with the Senate rules committee waiting for assignment after passing out of the Assembly at the end of May.

Public employee unions back the bill, sponsored by Assemblyman Bob Wieckowski, D-Fremont. It would alter AB 506, the municipal bankruptcy bill lawmakers passed last year.

The bill, also sponsored by Wieckowski, in most cases requires that local governments participate in a mediation process with creditors before being allowed to make a Chapter 9 bankruptcy filing.

Provisions in this year’s bill would include extending the power of mediators during the process.

Critics say it would just further complicate a new process.

Local government lobbying groups have said Wiekowski’s new legislation would give the mediator too much power and allow parties involved in the talks to delay negotiations without the consent of the municipality.

Stockton and Mammoth Lakes have used the mediation process outlined in AB 506 before entering bankruptcy. San Bernardino bypassed mediation by declaring a fiscal emergency, an exception permitted under AB 506.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.