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Union-backed legislation that would make it more difficult for local governments to file for bankruptcy protections sailed out of the Assembly Thursday despite opposition from local officials and business groups.

Assembly Bill 506 by Assemblyman Bob Wieckowski, D-Fremont, is the latest incarnation of a political battle stemming from the bankruptcy of Vallejo and warnings by other local governments that they are flirting with insolvency.

Unions fear that contracts and even pension benefits could be abrogated by bankruptcy and have been seeking legislation for several years that that would make it more difficult. AB 506 would, if enacted, require local governments to have a "neutral evaluation process" completed before seeking bankruptcy and would assign the task to the state Debt and Advisory Commission. But critics say that agency is dominated by union-friendly Democrats.

AB 506 garnered 48 Democratic votes to move out of the Assembly. Republicans left the chamber during debate on a health regulation bill and did not participate in the bankruptcy bill.


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