State house passes emergency manager bill

11:38 PM, Dec 12, 2012   |    comments
The Capitol in Lansing.
  • Share
  • Print
  • - A A A +

LANSING, Mich. (Detroit Free Press) -- The state House has passed what the Snyder administration says is a new and improved emergency manager law but opponents say is a warmed-over version of what voters rejected Nov. 6.

The House passed the Local Financial Stability and Choice act in a 63-46 vote late Wednesday, with Rep. Kevin Cotter, R-Mt. Pleasant, as the only Republican to join Democrats in voting against it.

Immediate effect for the new bill was rejected 63-45, meaning it would take effect around the end of March if passed by the Senate, likely to happen Thursday, and signed by Gov. Rick Snyder, as expected.

The legislation introduced by Rep. Al Pscholka, R-Stevensville, is similar to a draft Treasurer Andy Dillon and Gov. Rick Snyder had released. The administration said it's designed to address shortcomings in Public Act 4 by giving local officials in financially troubled cities and school district more input in decisions.

Incoming House Minority Leader Tim Greimel, D-Auburn Hills, said it is a "mirror image" of what voters just rejected and "another slap in the face to democracy perpetrated by this House."

The bill says an emergency manager will have the power to undertake "the modification, rejection, termination and renegotiation of contracts." The ability for an emergency manager to break or terminate collective bargaining agreements under certain circumstances was one of the most controversial aspects of PA 4.

But Pscholka said a key difference is that the new bill "gives a choice to local officials ... on how to keep their heads above water."

Since the suspension of PA 4 in August and its repeal in November, the state has been relying on Public Act 72 of 1990, which preceded PA 4. It provides for emergency financial managers with weaker powers than emergency managers wield.

"PA 72 does not provide all of the tools that are necessary to address financial emergencies in Michigan municipalities and school districts," Dillon said when the draft was released. "Gov. Snyder feels strongly that he has a responsibility to protect the health, safety and welfare of our residents and children."

Flint, Benton Harbor, Pontiac and Ecorse, as well as the Detroit Public Schools and other school districts, had their emergency managers converted to emergency financial managers without the power to scrap union contracts.

The City of Detroit is under a consent agreement, but the state has begun a review process that could lead to an emergency financial manager under the 1990 law.

Provisions of the new law include:

• Providing for greater input by local officials before the governor declares a financial emergency. Financial review teams would be required to hold at least one public meeting before making a decision.

• Giving local officials a choice among four options if a financial emergency is declared: a consent agreement, mediation, an emergency manager or Chapter 9 bankruptcy.

• Giving local officials more power to approve certain actions by an emergency manager or come up with alternative solutions that provide equal cost savings.

• Paying the salaries of emergency managers, and costs associated with a financial review, eliminating a sore point for cities and school districts, which now have to pick up those costs.

• Providing for the removal of an emergency manager if two-thirds of the local unit of government votes in favor of removal.

Rep. Maureen Stapleton, D-Detroit, said she knows something must be done to help financially distressed cities, but "we weren't sent here to take away powers from local government officials."

State Rep. Tom McMillin, R-Rochester Hills, defended the bill, saying the streets of Pontiac "are a lot safer because of an emergency manager" and that some cities and school districts are ones where "leaders refuse to deal with their spending problems."

"This is an excellent bill," McMillin said.

Cotter, the lone Republican who voted against the bill, declined to comment after the session on why he voted against it.

Rep. Jimmy Womack, D-Detroit, was absent for the vote.

By Paul Egan, Detroit Free Press Lansing bureau

Most Viewed Articles

Most Watched Videos