%1

Pennsylvania Auditor General Eugene DePasquale doesn’t rule out anything, including bankruptcy, to help the struggling Penn Hills School District, the Pittsburgh Post-Gazette reported. The district is about $172 million in debt, stemming from two recent construction projects, and the state Department of Education has added it to a list of districts in financial recovery status. Issues swirling around the district include alleged misappropriation of funds in several areas, from misuse of credit cards, to filling personal vehicles from district gas pumps, to questions involving construction of the new schools. A grand jury suggested no criminal charges, but the school board has asked state Attorney General Josh Shapiro’s office to conduct its own investigation. The grand jury report, released Feb. 5, attributed the district’s dire financial position to poor leadership, favoritism and mismanagement in the construction of the two schools. It recommended only legislative reforms.

Illinois Governor J.B. Pritzker’s (D) budget plans unveiled on Wednesday proposed to sell $2 billion of bonds to inject cash into the state’s retirement system, a tactic tried in 2003 that failed to stop the swelling pension-fund debt that’s pushed Illinois’s credit-rating to the cusp of junk, Bloomberg News reported. But his deputy governor, Dan Hynes, said that it won’t be a way for the government to shirk its annual contributions to the funds, as happened after Governor Rod Blagojevich’s record $10 billion debt sale sixteen years ago. "This time you have people who understand the devastating effects of doing what he did," said Robert Martwick, a state representative who chairs the House’s pension committee. The potential borrowing is part of a broader plan by the new governor to tackle Illinois’s $134 billion debt to its pension funds, one that also includes raising taxes and potentially handing government assets like office buildings over to the retirement system. Hynes said last week that the $2 billion would supplement Illinois’s annual contribution —  not be used to cover it —  in a wager that the investment earnings will reduce what the state owes.

Gov. Ned Lamont (D) presented his first budget proposal on Wednesday, suggesting sweeping changes to pensions and an expanded sales tax to close a $3.7 billion deficit projected over the next two years, the Wall Street Journal reported. Lamont’s $43.2 billion spending plan for the next two fiscal years calls for cities and towns to begin paying a portion of teacher pension costs. Currently, the state government picks up the entire cost. He also is asking state workers to accept lower cost-of-living adjustments for their pension benefits during years when the public retirement system has poor returns on investment. The governor also wants to begin charging sales tax on legal, accounting and real-estate services. The budget also calls for instituting highway tolls to help pay for transportation improvements. One option, which could bring in as much as $200 million annually, calls for tolling only trucks. A second option, congestion pricing, would toll all vehicles, charging more at busy times, and could generate up to $800 million annually. Lamont, who campaigned last year on his record as a cable-television entrepreneur who would use his business savvy to fix the state’s finances, is already facing opposition. Unions representing state employees said they don’t want to make more concessions after public-sector workers have agreed to nearly $2 billion in givebacks through agreements negotiated over the past decade. Lamont’s cost-of-living adjustment proposal is subject to collective bargaining, and union leaders said they aren’t interested.

The U.S. Supreme Court has been asked to review the ruling that could end Jefferson County, Alabama’s long-running bankruptcy appeal, Bond Buyer reported. Attorney Calvin Grigsby said on Tuesday that he’d filed for a writ of certiorari seeking to have the Supreme Court review the August appellate decision that ended his clients’ appeal of the county’s bankruptcy case. Grigsby, in a 59-page petition, asks the Supreme Court to consider several questions, including whether the “doctrine of equitable mootness” should bar his clients’ appeal of the county’s plan of adjustment because it alleges that the plan violates the 10th amendment, which reserves municipal utility ratemaking to the states and local governments. Grigsby, a former broker-dealer who is representing a group of ratepayers on the county’s sewer system, has said numerous times in court filings that his clients participated in the bankruptcy case but were never given an opportunity to have a hearing on the merits of their claims. Getting the justices to consider the petition might be difficult, said bankruptcy attorney John Whitlock, who is of counsel with Locke Lord LLP. The firm is not involved in the case. Jefferson County Commission President Jimmie Stephens said he expects the county to prevail if the Supreme Court agrees to review the lower court decision.

Detroit could have been on the hook for millions of dollars in a lawsuit alleging police abuse. Lawyers, however, are closing the case after eight years, acknowledging that the claims of possibly 200,000 people are practically worthless due to Detroit’s 2013 bankruptcy, the Associated Press reported. The 2010 lawsuit, which described poor conditions in holding cells and excessive detentions, was in progress when Detroit became the largest U.S. city to seek protection from creditors. The city eventually emerged with a clean balance sheet, a robust downtown and a national buzz among millennials. But a new, flush Detroit doesn’t mean a windfall for people who won the class-action case. Instead, they would need to get in line like other creditors because the lawsuit was pending during the bankruptcy. Attorneys worked on a settlement with the city but concluded it wasn’t practical: A $1,000 recovery per person could be worth as little as $40 — and paid over many years.

Fiona Ma officially assumes her post of California’s treasurer in January, but she has already made it clear that she won’t act as a rubber stamp for an office that sold more than $10 billion of bonds this year, Bloomberg News reported. After Ma, a Democrat elected in November, learned that the office was planning to sell veterans’ housing bonds next month, she demanded information on the program to be funded before allowing it to proceed, according to Ma and Tim Schaefer, deputy treasurer. The sale will now occur in February, Schaefer said.

San Bernardino’s (Calif.) governing body has a fresh look as two new city leaders took office yesterday, a third assumed a new position and a fourth returned to his post, the San Bernardino Sun reported. After winning their Election Day races, mayor-elect John Valdivia, re-elected Councilman Fred Shorett and newly elected council members Theodore Sanchez and Sandra Ibarra have been chosen to guide post-bankruptcy San Bernardino through the myriad issues still facing the city today. “We’ll be pushing really hard on being pro-growth, pro-development, pro-safety and pro-business,” Valdivia said following his victory over incumbent Mayor Carey Davis.