FRANKFORT, Ky. - On Wednesday June 29, 2016, Governor Matt Bevin ceremonially signed House Concurrent Resolution 13, which was sponsored by Representative Brad Montell, R-Shelbyville. Currently, Kentucky state statute is silent on who has the authority to do what, and when, in the event of a municipal bankruptcy.
HCR 13 seeks to remedy that situation by commissioning a study to present options that the Kentucky General Assembly could adopt in the future.
“Kentucky statutes need to be clear in the role the state has in the event of a municipal bankruptcy, and when that authority begins,” said Rep. Montell. “We certainly would not want to continue to risk having another Detroit or Stockton, CA in Kentucky. Both of those cities, plus the bankruptcy of Hillview, in Bullitt County, Kentucky, have been a wake-up call for us.”
Upon placing into statute Kentucky’s role in a municipal bankruptcy, things such as long-term debt, pension liability, and who is responsible for education funding, will have clarity. Further, credit agencies want to know if states are prepared for municipal bankruptcy and place weight on this when generating credit ratings, which are very important for a state’s ability to finance many types of business and projects.
“Several other states have addressed their role in municipal bankruptcies,” added Montell. “Kentucky must join the crowd and clarify, in statute, its role in this type of event for the sake of community stability and the state as a whole.”
The study is already underway and is set to be completed, with results delivered to the Interim Joint Committee responsible, by December 1, 2016.