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Legislators search for alternatives to Emergency Financial Manager law

By Katie Burke, Daily Staff Reporter
Published November 18, 2012

“No” was the word of the day for Michigan residents on Election Day, as all six of the ballot proposals were rejected by voters, including the narrowly defeated Proposal 1 — a referendum on the state’s controversial emergency financial manager law.

Following rejection of the policy — state Public Act 4, signed by Republican Gov. Rick Snyder in 2011 — officials say the government will have to work collaboratively to create a new method of aiding struggling communities. Under the act, a manager could have been appointed by either the governor or the state treasurer and would have had jurisdiction over public wages and benefits. The rejection of the proposal repeals Public Act 4 and signals a return to the original form of the law as it was passed in 1990 as Public Act 72.

State Rep. Jeff Irwin (D–Ann Arbor) said there were a variety of reasons for the defeat of Proposal 1, including the nature of the act and the sentiment of voters on Election Day.

“There were a lot of voters who actively opposed Proposal 1 because they thought that it went too far in usurping the control of local elected officials for state-appointed managers,” Irwin said. “I also think there was an overall sentiment of ‘no’ in the air on Election Day.”

He added there has been little consistency in how the state government has dealt with communities in financial struggle, bailing out some while appointing an emergency manager for others.

Irwin said the repeal of Public Act 4 allows state legislators to work together to come up with a more flexible and transparent form of the law.

“My hope is that this time around, the Republicans will be more bipartisan about the way they approach the issue and allow some of the Democratic amendments to be successful,” Irwin said.

Snyder was not available for comment on the proposal’s failure. However, he said in a November statement that he believed the act had the potential to improve the state’s economy.

“This law creates an early warning system to help communities avoid a financial emergency, or if they are in emergency, it empowers an emergency manager with more ability to complete their work so a community can get back on track faster,” Snyder said in the statement.

Adjunct public health lecturer Gregory Saltzman, a professor of economics at Albion College, said the proposal’s rejection will have varying effects on communities across Michigan, but particularly significant effects on those with emergency managers already in place.

“People may be a little bit anxious about whether they’ll be able to meet their financial obligations and that could create economic problems for the communities in fiscal trouble,” Saltzman said.

Four cities — Flint, Benton Harbor, Pontiac and Ecorse — and the school districts in Muskegon Heights, Detroit and Highland Park have emergency managers. Additionally, Detroit, Inkster and River Rouge are under consent agreements, which offer a financial review team as an alternative to a manager.

Saltzman noted that under Public Act 4, the emergency manager’s extended authority allowed quicker and more extensive reform.

“(Public Act 4) allowed emergency managers to have the authority to not follow the collective bargaining process for public employees anymore … allowing the emergency manager to unilaterally change wages,” Saltzman said.

Saltzman said such action was taken on July 1, when a 10-percent cut to wages in the Detroit Police Department was instituted by the emergency manager.

He added that any new reforms to the current emergency manager law will still contain some of the Public Act 4 elements, but will not give as much power to the manager if it is going to remain in effect.

“The Republicans still have control of the state legislature … but they can’t pass the same law that has been rejected by the voters, but they will try to have something that gives more authority to emergency managers than the old law,” Saltzman said.