Municipal Governance in Bankruptcy

February 16, 2016. Share on Twitter

Governance in Bankruptcy. Ronald Reagan, the former President and Governor of California, in his pre-political days, for General Electric, used to say: “Progress is our most important product.” Now, it appears, there might be some real governance progress underway in San Bernardino—perhaps presaging changes that will be critical not only to its hopes from emerging from the longest municipal bankruptcy in U.S. history, but also for realizing a sustainable fiscal future. Yesterday, a municipal committee tasked with reforming the city’s charter, made up of members whom the City Council and Mayor had appointed, provided an update on its progress toward a new charter—a key step as they are aiming at presenting final recommendations by April in order to ensure they may be put before the city’s voters in November.

In our original report on San Bernardino, we noted: “Everyone interviewed for this report made direct or indirect reference to the city charter one way or the other. And almost everyone indicated ‘I have never seen a more dysfunctional design for a city government than the provisions contained in the city charter.’ It is an understatement to say it is designed to diffuse power and prevent sound management, accountability, and transparency. It actually seems worse than the old commission form of government with all its fiefdoms. At least there you could hold a commissioner accountable. That being said, the people of the city have operated with that system for so long and they know so little about other options, that they cannot possibly understand it could be any other way. It is going to take some reformers to come along who can convince them to bring their system into the 21st (or even 20th) century. Then the political culture can start to change.”

Indeed, San Bernardino’s own, current version of its plan of debt adjustment, the committee in its written report to the City Council noted: “identified the city’s charter as a barrier to efficient, effective government, because it is overly complex, hard to understand, and contains elements that are inconsistent with best practices for modern municipal government…Subsequently, the charter committee has continued its work to develop recommendations for a new or substantially revised charter that reflects the principles of good governance and meets the needs of the community.” The draft plan notes: “the charter committee has continued its work to develop recommendations for a new or substantially revised charter that reflects the principles of good governance and meets the needs of the community.”

Nevertheless, any changes will confront challenges: it was just 14 months ago that the city’s voters rejected an earlier charter committee proposal to remove police and firefighter pay from the charter, which would have allowed those salaries to be set by negotiation, rather than a formula based on what other cities (larger municipalities with higher tax bases) pay, albeit voters did agree to a change to end the practice of paying terminated city employees while they wait for an appeal of their employment. (California law only allows changes to a municipal charter if approved by voters in a November election in an even-numbered year.) Nevertheless, there seems to be growing awareness of the need for governance change: In a survey the charter committee conducted last year, only 8% of 440 complete responses agreed that the charter should not be changed: 51% responded it should be revised; 42% said it should be replaced. For the committee members, of course, the harder question is just how voters—and leaders—believe it ought to be changed.

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