Volcker Alliance Convenes Workshop on Chapter 9 for Distressed Municipalities and States
The Volcker Alliance, George Mason University’s State and Local Government Leadership Center and the Federal Reserve Bank of New York convened a meeting of more than 75 mayors, academics, financial professionals, state, local, and public-worker union officials at the New York Fed on April 14 to discuss ways to prevent and cope with state and local financial distress.
States and municipalities account for $2 trillion in economic activity, more than percent of U.S. Gross Domestic Product, New York Fed President William C. Dudley told the group. “Without successful state and local governments, the Fed’s dual mandate of maximum sustainable employment with stable prices would be much more difficult to attain.”
During the roundtable colloquium, entitled “Chapter 9 and Alternatives for Distressed Municipalities and States,” attendees discussed the use of state financial control boards to oversee fiscally troubled local governments, as well as whether more transparent budgeting practices and improved accounting techniques to better disclose governments’ long-term fiscal obligations for pensions, retiree health care, and infrastructure can serve as early warnings to improve decision-making and help avoid fiscal strain.
Chapter 9 is the section of the U.S. Bankruptcy Code dealing with municipalities, and participants in the day-long colloquium included U.S. Bankruptcy Court Judges Steven Rhodes, Thomas Bennett, and Christopher Klein, who, respectively, have overseen cases in Detroit, Stockton, California, and Jefferson County, Alabama. Alliance President Shelley Metzenbaum, Director Richard Ravitch, State and Local program director William Glasgall, and State and Local Government Leadership Center Director Frank Shafroth also joined the discussions.