Politics & Government
1:22 pm
Thu November 15, 2012

Will new emergency manager plan be hybrid of old laws?

What do you get when you take Michigan’s past two emergency manager laws, Public Act 72 and the recently repealed Public Act 4, and add them together?

Public Act 76, of course.

That is the working title of a suggested hybrid law outlined in a state Treasury Department memo obtained by the Detroit News.

According to the News, the memo, circulating among state legislators, proposes bills that would offer financially-distressed municipalities more choice than the former emergency manager laws.

Daniel Howes of the News has more:

The basket of measures would offer elected leaders in financially troubled cities and local school districts four different options instead of the one-size-fits-all process that culminated in the appointment of an all-powerful emergency manager whose powers included the ability to abrogate union contracts.

"The fiscal solvency or lack thereof of local units remains a major concern of all of us," says the memo, a copy of which was obtained Wednesday by The Detroit News. "Currently we believe the system can be strengthened. The Governor doesn't want to just reinstate PA 4 as that would ignore the will of the voters.

"On the other hand he feels very strongly that something needs to be done to deal with the potential insolvency of troubled municipalities and school districts. One of the major complaints of PA 4 was that it took too much power away from the local authorities. To deal with both the need to act and the power of local decision making, the Governor would like you to consider changes in the statutes that speak to many of these issues."

Under the proposal, local leaders would have the choice to:

  • Work with state officials to reach a “structured settlement” with creditors, bondholders, and labor unions
  • Request the appointment of an emergency manager
  • Bargain with the state to craft a consent agreement with oversight from a Financial Advisory Board
  • File for Chapter 9 bankruptcy

An official within the Snyder administration told the Detroit News that the proposed bills are meant to address criticism claiming the emergency manager laws are “anti-democratic.”

A statewide referendum on PA 4 repealed the law with 53% of the vote.

Attorney General Bill Schuette has said that PA 72 should be reinstated in lieu of PA 4.

Emergency financial managers remain in place under PA 72, pending legal review of the older law.

- Jordan Wyant, Michigan Radio Newsroom