{"id":22235,"date":"2017-05-16T09:33:55","date_gmt":"2017-05-16T15:33:55","guid":{"rendered":"http:\/\/update.legislature.ne.gov\/?p=22235"},"modified":"2017-05-16T09:33:55","modified_gmt":"2017-05-16T15:33:55","slug":"bill-amended-to-tie-city-bankruptcy-to-pension-funding-level","status":"publish","type":"post","link":"https:\/\/update.legislature.ne.gov\/?p=22235","title":{"rendered":"Bill amended to tie city bankruptcy to pension funding level"},"content":{"rendered":"

Cities with pension plans not funded to a certain level would be unable to file for bankruptcy under a bill lawmakers amended on the second round of debate May 15.

\"Sen.
Sen. Paul Schumacher<\/figcaption><\/figure> <\/p>\n

Introduced by Columbus Sen. Paul Schumacher, LB72 initially proposed a statutory lien on government bonds to ensure that bondholders are paid first if the issuing government entity goes bankrupt. Current law authorizes counties, cities, villages and other Nebraska political subdivisions to file a petition in U.S. bankruptcy court.<\/p>\n

Senators had expressed concern during general file debate about prioritizing bondholders over a city\u2019s pensioners and services. <\/p>\n

So Schumacher introduced an amendment on select file that instead would prevent a city or village with a defined benefit retirement plan from filing for bankruptcy unless the plan\u2019s funded ratio reaches a certain percentage. The ratio would increase incrementally from approximately 52 percent for any petition filed between 2020 and 2023 to 90 percent after Jan. 1, 2038. <\/p>\n

Schumacher said the rules determining which of a city\u2019s creditors get paid first in the event of bankruptcy are unclear, creating uncertainty for a city\u2019s bondholders and pensioners. The amendment would reduce that uncertainty by removing a city\u2019s ability to declare bankruptcy unless it follows a path toward a higher level of pension funding, he said.<\/p>\n

\u201cDon\u2019t follow it, continue underfunding your pensions, and you\u2019re going to be stuck without the right to declare bankruptcy under our law,\u201d Schumacher said. <\/p>\n

This would protect bondholders, pensioners and the state if either of its two largest cities would go bankrupt, he added. Lincoln\u2019s pension plan is approximately 75 percent funded, Schumacher said, but Omaha\u2019s is only about 50 percent funded, which he said is too low. <\/p>\n

The amendment also would allow a city or village without a pension plan \u2014 which Schumacher said is typical of most cities and villages in the state \u2014 to declare that its general obligation bonds would be equally and ratably secured by property taxes levied from year to year by the city or village. Those bonds would have a first lien on the property taxes levied. <\/p>\n

Sen. Mark Kolterman of Seward supported the amendment, saying that it would help address the issue of underfunded city pension plans. He said the Legislature should continue to discuss pension reform because several Nebraska cities have plans that are only 50 to 60 percent funded. <\/p>\n

\u201cIt\u2019s all about keeping these plans solvent and stable so we don\u2019t have to worry about bankruptcy,\u201d Kolterman said. <\/p>\n

Sen. Sue Crawford of Bellevue supported the amendment but said that Omaha and Lincoln do not because it could have unintended consequences for those cities\u2019 bond ratings. <\/p>\n

\u201cThe city of Omaha and the city of Lincoln have good bond ratings and are able to get bonds right now,\u201d she said. \u201cIt\u2019s not a concern they have and we don\u2019t want to create that problem for them.\u201d<\/p>\n

Senators voted 30-0 to adopt the amendment and advanced LB72 to final reading by voice vote. <\/p>\n","protected":false},"excerpt":{"rendered":"

Cities with pension plans not funded to a certain level would be unable to file for bankruptcy under a bill lawmakers amended on the second round of debate May 15. <\/p>\n","protected":false},"author":1,"featured_media":22224,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6],"tags":[81],"class_list":["post-22235","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-commerce-and-insurance","tag-sen-paul-schumacher"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/update.legislature.ne.gov\/wp-content\/uploads\/2017\/05\/LB72Schumacher5-15-17a.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/22235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22235"}],"version-history":[{"count":2,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/22235\/revisions"}],"predecessor-version":[{"id":22237,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/22235\/revisions\/22237"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/media\/22224"}],"wp:attachment":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}