Under New Emergency Manager Law, Cities Have “Options”

Category: Breaking News Published on Monday, 31 December 2012 11:11 Written by Minehaha Forman

Gov. Rick Snyder on Thursday signed legislation to replace Public Act 4, an emergency manager law that was overturned by a public vote in November.

Snyder says the new law emergency manager (EM) law, Public Act 436 of 2012, is a improvement on the voter-rejected version.

The new EM legislation, much like it’s predecessor, allows the state to intervene in cities and school districts facing financial troubles.

The difference is that leaders in targeted municipalities now have a choice as to how the state gets involved.

Under the new EM law, locally elected officials in cash poor cities and school districts have four options. They can chose between a consent agreement with the state, chapter 9 bankruptcy, mediation, or an emergency manager.

"This legislation demonstrates that we clearly heard, recognized and respected the will of the voters," Snyder said Thursday in a statement. "It builds in local control and options while also ensuring the tools to protect communities and school districts' residents, students and taxpayers."

Because Michigan voters repealed the old EM law by rejecting Proposal 1 on the November ballot, the new law includes an appropriation making it immune to referendum, or public vote.

The new law also allows emergency managers, should a city opt for one, to break union contracts if labor negotiations fall through. The power to break union contracts is a power usually used in municipal bankruptcy proceedings.

Under current Michigan law, a city must first go under state-appointed financial control before it is eligible for bankruptcy

The new law gives local officials the option to reject an appointed EFM’s proposal on how to fix finances, but they must come up with a viable alternative. Ultimately, a state panel would have the power to decide which plan to use and an emergency manager would implement it.

One key difference between PA 4 and the new PA 436 is that local leaders now have the power to remove a state-appointed emergency manager after one year by a 2/3-majority vote.

Another significant change is that the new EM law requires the state to pay emergency manager salaries instead of requiring financially struggling municipalities and school districts to cover the costs.

Still, critics of emergency manager legislation pledge to fight the new EM law.

Greg Bowens, a spokesman for the Stand Up For Democracy coalition whose efforts led to repeal PA 4, said the new legislation is not much different.

"We think that the governor's view of what the will of the voters is is quite different from what the actual voters did,"

Bowens told MLive.com, calling the new law “The worst Christmas present that municipalities could have.”

The City of Detroit may be added to a list of cities facing state intervention. This month, Gov. Snyder commissioned a state review of the city’s finances that could result in the appointment of an EM, or other state-mandated options.