Traverse City Record-Eagle

Michigan

December 14, 2012

State Senate OKs new emergency manager bill

Measure includes an appropriation, so this one can't go before the voters

LANSING (AP) — The Republican-led Michigan Legislature cleared the way Thursday for GOP Gov. Rick Snyder to sign a replacement for an emergency manager law struck down by voters, delivering another punch to Democrats still reeling from this week's passage of right-to-work legislation limiting unions' power.

The Senate approved the legislation mostly along party lines that contains key provisions from the rejected law but comes with more choices for local school districts and communities deemed by the state to be in a financial emergency. The House passed the bill Wednesday night.

The new version proposed by Snyder and GOP legislative leaders gives four options to those governments: accepting an emergency manager; undergoing bankruptcy; going through mediation; and entering a consent agreement similar to an existing one between the state and Detroit.

The legislation also includes a $770,000 appropriation to cover managers' salaries, a provision that would prevent a second defeat at the polls because spending bills are legally shielded from referendums.

As with the rejected law, the manager would have the power to change or cancel contracts, but local officials also could develop an alternative plan provided it generates equal financial savings. Should a local government choose an emergency manager, the state would pay for the manager, and local officials would have the option of removing the manager after one year and with a two-thirds vote of its governing body.

The state has been operating since under a previous law that gives managers fewer powers, but leaders argue it's inadequate to deal with failing cities or schools.

Snyder and other backers of the plan argue adding the choices and other steps to provide more local input respect the will of the voters.

Democrats see it as a blow to democracy because it subverts local control. They say it's the same as the rejected law with an opportunity for distressed communities to "pick their poison."

Highland Park Democratic Sen. Bert Johnson offered several changes that failed to garner support, including one that would have enabled a consent agreement between the state and financially struggling local government that's "binding to both parties" and lasts for no more than two years.

"What we need is a partnership," he said. "We do not need a dictator in Lansing."

Hillsdale Republican Sen. Bruce Caswell said he voted no because he was "following the dictates" of his constituents who voted against the emergency manager bill.

Opponents also contended the measure was being rushed similar to the way right-to-work legislation reducing union strength sailed through the legislative process in recent days amid widespread protests at the Capitol. But supporters noted that the emergency manager bill was considered during a committee hearing this month.

Senate Majority Leader Randy Richardville disputed critics' claims that it's merely a rehash of the failed law with poisonous extras.

"There are very different paths they can take," he said. "These are usually people who are in a situation that has a financial emergency. They're saying, 'Don't help us, don't help us, and you give us another option, we don't like that either.' The problem isn't being solved."

Richardville said the only option some local officials are leaving themselves is bankruptcy.

"And they'll have the option to choose that if they want, but I don't think they'd be representing their people very well if they did that," he said.

The new emergency manager proposal was announced last week on the same day that Michigan Treasurer Andy Dillon said he'll likely order a review of Detroit's municipal finances, a 30-day process that could lead to a state takeover of its largest city that's deep in debt and has a budget deficit of more than $200 million.

Since the spring, Detroit and the state have been partners in a consent agreement that allows limited state oversight of Mayor Dave Bing's fiscal restructuring plans. Tied to the deal is millions of dollars in bond money held in escrow by the treasurer's office and released to Detroit when certain benchmarks are achieved.

The deal averted the placement of an emergency financial manager in Detroit.

Managers are in place in Benton Harbor, Ecorse, Flint, Pontiac and Allen Park, as well as in the Muskegon Heights, Highland Park and Detroit school districts.

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