Traverse City Record-Eagle

Archive: Friday

December 28, 2012

Gov. Snyder signs new emergency manager law

New law gives local government, schools choice of remedy

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DETROIT (AP) — Gov. Rick Snyder put a new emergency-manager law on the books in Michigan on Thursday, weeks after voters repealed a version that gave sweeping powers to a single person to overhaul financially distressed communities.

The new law will give local governments and ailing school districts the opportunity to choose their own remedy. If a review team finds that a financial emergency exists, they can request an emergency manager, ask for a mediator, file for bankruptcy or introduce a reform plan with the state.

"This legislation demonstrates that we clearly heard, recognized and respected the will of the voters," Snyder said in a statement. "It builds in local control and options while also ensuring the tools to protect ... residents, students and taxpayers."

The law won't kick in until late March. Under the old law, the power to send an emergency manager rested solely with the governor. It was a threat to labor unions because managers had the power to throw out contracts.

Under the new law, a manager still would have the power to change contracts. But local officials also have the option to develop an alternative plan if it saves the same amount of money as the manager's proposals. Local governments can remove a manager after one year with a two-thirds vote of its elected officials.

The law includes a $770,000 state appropriation to cover managers' salaries, a provision that would shield it from another statewide vote because spending bills are immune to referendums. The philosophy behind the law is that troubled local governments may lack the political consensus needed to get back on track or they simply need expertise to get past their financial problems.

Managers are working now in Benton Harbor, Ecorse, Flint, Pontiac and Allen Park, as well as in the Muskegon Heights, Highland Park and Detroit school districts. But they're operating under a decades-old law with fewer teeth that automatically kicked in after the November election. The communities have struggled with lower tax revenue due to a drop in property values and a weak economy.

Allen Park, near Detroit, was stable until it sold bonds for a movie studio that went bust. Residents recently voted down a tax increase.

Threatened with a state takeover last spring, Detroit is operating under a set of financial reforms negotiated by the Snyder administration and city officials. The city, however, continues to struggle and is under yet another review.

Snyder promised last week that some type of "action will be taken" in Detroit in the weeks ahead, but probably before the new manager law takes effect.

The city council has sent a plan to state Treasurer Andy Dillon that calls for layoffs, days off without pay, the sale of some assets and possible pay cuts, council members said during meetings Thursday at the Detroit Free Press and The Detroit News.

They said the money-saving moves exceed those proposed by Mayor Dave Bing, who has said 400 to 500 layoffs, or 5 percent of the workforce, are likely in the new year.

AP-WF-12-27-12 2111GMT

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