Clinton Says He'll Veto Bankruptcy Bill
Parnas, Susan M., Guastella, Samantha, Nation's Cities Weekly
In the waning hours of the first session of the 106th Congress, the full Senate took up its consideration of bankruptcy reform legislation (S. 625). At press time, the Senate had numerous amendments left to consider on this bill, and was stuck in a contentious debate over a "homestead exemptions" provision.
President Bill Clinton also issued a statement on November 9 that would veto S. 625 in its current form, largely due to the passage of minimum wage legislation that was sponsored by Senator Pete Domenici (R-N.M.) and tacked on as an amendment to the bankruptcy bill. With a target adjournment date of November 17, 1999, it is possible that the Senate will finish its consideration of this bill before it adjourns.
NLC has supported both S. 625 and its counterpart in the House, H.R. 833 (which passed in May), because they incorporate municipal concerns regarding ad valorem or property tax priority in bankruptcy filings by both individuals and companies.
The Senate and the House bills differ on their treatment of the test for debtors in bankruptcy to meet for Chapter 7 versus Chapter 13 filings, but municipal issues on the treatment of property taxes are similar. Both bills would give property taxes a higher priority status than under current bankruptcy law.
Since property taxes are often allocated to the education budget in cities and towns, increased bankruptcy filings cause some cities and towns to suffer deficits in their education budgets due to debt relief from property taxes. The House bill also secures the state or local statutory interest rate for unpaid property tax penalties for debtors in bankruptcy in all cases; the Senate bill does so in all cases, but one discussed herein. Both bill fix the amount of time a debtor has to repay property taxes at six years.
Out of the 200 proposed amendments, NLC was concerned about one in particular that impacts the tax provisions NLC and others worked so hard to achieve last year. This Amendment is No. 2758, which was put forward by Senators Roth (R-Del.) and Moynihan (D-N.Y.). The Roth/Moynihan Amendment passed on November 9, 1999, by unanimous consent, despite NLC's and others' 11th hour lobbying efforts to amend the offending language.
The Roth/Moynihan amendment provides that local government creditors will receive repayments in Chapter 11 filings that are predominantly filed by corporations, on lies in regular installments at an interest rate consistent with that contained in the Internal Revenue Code. …