Illinois legislators are considering whether local governments should be allowed to declare bankruptcy. Members of the Illinois House heard from dueling experts today.
It’s rare for cities and towns to declare what’s known as a Chapter 9 bankruptcy. William Brandt, a bankruptcy consultant, says when it does happen, it's really just an “abrogation of political will” by elected officials.
“If you can’t make the tough decisions, you file a Chapter 9, and you allow a judge to administer the pain to a variety of people. But that’s all you can do is to allow the judge to administer pain.”
Brandt says the Illinois proposal would put the brunt of that pain on unionized workers and pensioners.But Rep. Ron Sandack, a Republican from Downers Grove, says municipal bankruptcy would be a last resort. He says the main idea behind the legislation is to give mayors more leverage for when they’re negotiating labor contracts.
