By Ian McKendry
WASHINGTON (MNI) – State municipalities declaring bankruptcy would
be dangerous and could ultimately end up being devastating Bill Lockyer,
the California state treasurer, said in a statement Friday.
A story in the New York Times Friday suggested some members of
Congress may be working on a plan that would allow states to declare
bankruptcy, but Lockyer said it is “baloney” and that states didn’t ask
for a plan that would allow them to do so.
“Bankruptcy would devastate states’ ability to recover from the
recession and make the infrastructure investments that create good
jobs,” Lockyer said.
“The people making this dangerous suggestion — and those who lend
it credibility it doesn’t deserve — confuse states’ near-term budget
deficits with long-term funding obligations,” he added.
Lockyer said the states’ budget woes, including pension
obligations, are serious problems but they are dealing with them and
have reduced pension benefits and increased employees’ contributions to
address those problems.
He also said states have the tools to fix the budget shortfalls and
that a state bankruptcy plan would be like taking a “wrecking ball” to
state economies and tax payers.
** Market News International Washington Bureau: 202-371-2121 **
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