Bankruptcies, defaults, and other local government financial emergencies Page: 29
This book is part of the collection entitled: Advisory Commission on Intergovernmental Relations and was provided to Digital Library by the UNT Libraries Government Documents Department.
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The 1973 ACIR report concluded that states should
play a key role in providing assistance to local governments
faced with financial emergencies. To facilitate
such assistance, the report listed recommended guidelines
to be used to determine when intervention was
required and recommended a series of state actions that
might be taken after an emergency was declared.
The four guidelines for determining a financial emergency
1) default in payment of principal or interest on debt;
2) failure for a specified time period to make payments
to the state or other governments of required
tax withholdings, pension contributions, or other
3) failure for a specified time period to pay salaries or
pension benefits; and
4) a floating debt of accounts payable or other current
obligations which, net of funds available, exceeds
10% of the total prior year's appropriation.
The 1973 report's recommended state action consisted,
in essence, of state receivership with a variety of
powers to regulate and control the local government's
finances. Two key powers among the 13 specific ones
enumerated were: (1) to require a plan for regaining solvency;
and (2) to provide a temporary state cash loan or
to guarantee a loan from private sources to enable the
government to meet its immediate needs.
Two states, New York and Ohio, enacted laws that
were patterned after the report's recommendations and
each has had experience with actual financial emergencies.
The experiences of these two states provide a good
basis for evaluating the 1973 recommendations of the
Commission. The Ohio law most closely follows the
recommendations and has been involved in ten in
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United States. Advisory Commission on Intergovernmental Relations. Bankruptcies, defaults, and other local government financial emergencies, book, March 1985; Washington, D.C.. (digital.library.unt.edu/ark:/67531/metadc1317/m1/39/: accessed November 20, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.