Stressed by pension debt, other financial issues and the possibility losing a chunk of their state aid, some Illinois cities want the option to file for bankruptcy, the Associated Press reported yesterday. They've found an ally in Illinois Rep. Ron Sandack (R), who's proposed legislation to allow municipalities to follow in the footsteps of Detroit and other cities in restructuring debt and paying back creditors. Opponents, however, say there are less drastic, intermediate steps than the "dangerous" path of bankruptcy. Twelve states authorize cities to file chapter 9 bankruptcy filings, according to the National Conference of State Legislatures, and another 12 grant conditional ability to file. Twenty-six states either don't have chapter 9 authorization or prohibit it. Sandack is sponsoring legislation in Illinois that would grant authority for communities to file for bankruptcy under chapter 9 of the federal code. He said that it's a "measure of last resort," especially with Gov. Bruce Rauner's proposal in next year's budget to cut in half the local governments' share of state income taxes by 50 percent. "It's just giving time and space to do things right," Sandack said.
