Michigan court rejects emergency manager law challenge
* Current emergency manager law remains in effect
* Activist to appeal court decision
* New Michigan law considered
Nov 16 (Reuters) - A Michigan appeals court panel ruled on Friday that the state's current emergency manager law can remain in effect even though voters last week rejected a law that replaced it.
State officials had resurrected a law known as Public Act 72 to take the place of a stronger 2011 law -- Public Act 4, which was suspended in August pending the outcome of the Nov. 6 vote. Both laws allowed for Michigan to intervene in financially troubled local governments and to appoint emergency managers for those governments.
Once Public Act 4 was suspended, the state reappointed emergency managers running cities and schools districts using Public Act 72. Community activist Robert Davis had sought to oust the emergency manager running the Detroit Public Schools by arguing before the appeals panel that Public Act 72 no longer existed.
But the court ruled that when the voters rejected Public Act 4, they also rejected the legislative repeal of Public Act 72, allowing the measure to remain in effect.
Andrew Paterson, Davis' attorney, said an appeal will be filed on Monday with the Michigan Supreme Court.
"The supreme court will straighten this out," he said.
With other litigation pending against Public Act 72, Michigan Governor Rick Snyder, a Republican, has been exploring the idea of crafting a new law. Last week, he said that the repeal of Public Act 4 could open the door to municipal bankruptcies in the state.
Caleb Buhs, a spokesman for Michigan's Treasury Department, said legislative discussions are in the early stages.
Phyllis Browne, a spokeswoman for House Republicans, said lots of options are being weighed.
Democratic lawmakers have so far been cut out of discussions, according to Bob McCann, a spokesman for Senate Democrats.
"That's disappointing. We want to make sure if we're moving forward we're doing it in a way that doesn't fly right in the face of what voters told elected leaders last week," he said.
Public Act 4 was repealed by nearly 53 percent of voters. Meanwhile, Detroit's city council met in closed session on Thursday on whether the law's repeal affects the city's consent agreement, which was based in part on Public Act 4.
The case is: Robert Davis vs Roy Roberts, Court of Appeals, State of Michigan, docket number 313297.