Comparing the new emergency manager law with the one repealed by voters

Mar 28, 2013

Credit Marlon Phillips / Michigan Public Radio

Today's the day.

It's the day the state's new emergency law goes into effect - the day current 'emergency financial managers' become 'emergency managers.'

Last November, Michigan voters repealed the state's much maligned Public Act 4 (emergency manager law). The majority of voters felt the law put too much power in one person's hands.

Legislators reacted to the repeal by passing a modified emergency manager law (Public Act 436).

It restores a lot of the old powers granted to emergency managers under the old law, but with some differences.

Here are some similarities and differences between the old EM law, and the new one.

Similarities:

  • Like Public Act 4, Public Act 436 is intended to allow the state to intervene in a local government's or school district's financial struggles at an early stage. A state financial review team examines the finances and declares a 'financial emergency' before the state takes action.
  • Under Public Act 436, a state-appointed emergency manager, once again, has the ability to reject, modify, or terminate labor agreements.
  • Emergency managers oversee employees and elected officials in the school district or local government, so the EM could strip local officials of their duties and of their pay.
  • Emergency managers can sell off assets of a local government or school district. The new emergency manager law puts more conditions on such sales, but the power remains. (If the asset is worth more than $50,000, the EM needs the state treasurer's approval.)
  • EMs can change staffing levels or combine departments, so long as it doesn't conflict with an existing charter provision.

Differences:

  • Under the new law, local governments or school boards can vote to get rid of an emergency manager after 18 months with a 2/3 majority vote.
  • Now, after the state declares a 'financial emergency,' the local government or school district has four options: choose an emergency manager, file for bankruptcy, sign a consent agreement, or undergo an evaluation process by a neutral third party.
  • Remember how the old emergency manager law was repealed by a voter referendum? The new emergency manager law can't be repealed this way. That's because legislators included an appropriation in their bill (citizens could, however, challenge the law with a statutory initiative).
  • The state now pays for the emergency manager. Under the old law, the cash strapped local government or school district was required to pay.

Those are the big differences and similarities we've noticed. Have you noticed others? Let us know in the comments below.

- Marlon Phillips, Michigan Radio Newsroom