Michigan Kills Controversial Emergency Manager Law

Voters repealed a unique law that gave state-appointed officials unprecedented power in struggling cities and school districts. But the debate is far from settled.
by , | November 7, 2012

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Michigan's controversial emergency manager law, which gave unprecedented authority for state-appointed officials to run local governments, is no more.

Voters repealed Public Act 4, the law enacted by the state legislature last year, which allowed the state's "emergency managers” to take over powers held by mayors and other locally elected officials. Emergency managers could pass ordinances, sell property, and make changes to labor contracts in struggling cities and school districts.

The proposal to repeal the law passed with 52 percent of the vote, with 94 percent of precincts reporting, according to the Detroit Free Press.

"Good public policy has to have community support, and voters in Michigan sent a strong signal that the approach to the emergency manager takeovers is not the solution that they want for our financial challenges," Flint Mayor Dayne Walling -- whose own powers have been reduced by the law -- told Governing Wednesday morning.

Currently, three Michigan school districts and four cities are operating under the state oversight. Three other cities signed agreements that give the state broad oversight but fall short of turning over total control to a state appointee.

But the debate over emergency managers is far from settled. While PA 4 has been repealed, state officials maintain that a previous version of the law, Public Act 72, remains in effect. Opponents of emergency managers say PA 72 is less onerous than its successor. But they still would prefer to see emergency managers in localities gone altogether.

So as opponents of emergency management are celebrating their victory at the polls, they are also bracing for two-pronged fight going forward.

A series of lawsuits filed prior to the vote will determine whether PA 72 is in effect, or whether emergency management will be eliminated outright. Meanwhile, state lawmakers could craft a replacement bill to PA 4.

"Any new law should not usurp the authority of elected officials," says Herb Sanders, an attorney with Stand up for Democracy, the labor-backed group that lead the campaign for repeal. "It should not be applied arbitrarily and capriciously as PA 4 was. It should include some type of provision in which local governments are not left holding the bag for bad bond deals encouraged by the state."

Walling says he hopes the legislature doesn't "rehash what's happened over the last two years."

Some lawmakers have already suggested they'll consider new emergency management legislation, and Gov. Rick Snyder has previously said a new version of an emergency manager law could be on the table if PA 4 was thrown out by voters or the courts.

James Hohman, assistant director of fiscal policy at the Mackinac Center -- a Michigan think tank that supports PA 4 -- says state lawmakers will likely take up the issue soon in their lame duck session. "The legislature will be wary of passing something way too similar to something that taxpayers have already rejected," Hohman says.

While labor groups scored a victory with the defeat of PA 4, they faced a major defeat in a separate effort to enshrine public and private sector workers' collective bargaining rights in the state constitution. That effort was rejected by 58 percent of voters, according to the Free Press.

"It's going to leave a lot of legislators scratching their heads as to what's the message voters are sending," Hohman says.

Labor groups oppose PA 4 because one of the greatest powers reserved by emergency managers is the ability to force changes to existing labor contracts. Public sector unions have balked at the use and threatened use of that authority, saying it jeopardizes good pay and benefits for public workers and encourages outsourcing to private firms.

But supporters of emergency management say that authority is a critical tool for any official trying to repair a financial distressed city, since personnel costs typically represent local governments' greatest expense.