Senate OKs emergency manager bill for government units

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Updated: January 31, 2012 1:57AM

INDIANAPOLIS — Legislation giving a state board authority to appoint an emergency manager to oversee a cash-strapped local government’s finances passed the Indiana Senate, 45-5, on Monday.

The bill’s author, state Sen. Ed Charbonneau, R-Valparaiso, reintroduced the bill this year after removing the ability for a local government to file bankruptcy. Charbonneau said the bankruptcy provision killed the bill last session.

“This bill is basically the same bill with one exception,” Charbonneau said. “It removes the option to go to bankruptcy as a final step in the process. It was an issue that caused a lot of controversy last year.”

The bill establishes a five-member board, which is a reconstitution of the Indiana Distressed Unit Appeals Board. Local governments can petition the board, and if the board finds the government distressed, it will appoint an emergency manager who would be responsible for shoring up finances.

“Basically, what we are doing is providing help for distressed local units of government,” Charbonneau said, “without the option to go to bankruptcy.”

The bill requires the local government that requested the help to pay for the emergency manager and gives the manager broad authority to oversee the unit’s finances, including the ability to renegotiate labor contracts and reduce or suspend employees’ salaries.

State Sen. Earline Rogers, D-Gary, voted against the bill.

Rogers said she didn’t want to see the bankruptcy provision in the bill but felt like lobbying from the banking industry played a role in its removal.

“In my interpretation it takes the process out of the hands of the unit of government and leaves it in the hands of the manager,” Rogers said. “So that’s why I voted against it.”