Dec 27 Michigan Governor Rick Snyder signed into
law on Thursday a bill that gives options to cities and school
districts for dealing with severe financial problems, including
The law, passed by the Republican-controlled legislature
earlier this month, allows local elected officials to choose
between Chapter 9 municipal bankruptcy, if the move is approved
by the governor; an emergency manager; arbitration with a
neutral party; or a consent agreement laying out terms for
fixing the government's finances.
It replaces a controversial law repealed by Michigan voters
on Nov. 6 that made it easier for the state to intervene in
fiscally troubled cities and schools and gave state-appointed
emergency managers running the governments the power to suspend
collective bargaining agreements with workers.
That law, known as Public Act 4, was suspended in August
pending the outcome of the vote and the state has been relying
on a former, weaker law since then.
Snyder, a Republican, defended the new law against criticism
that it is too similar to Public Act 4.
"This legislation demonstrates that we clearly heard,
recognized and respected the will of the voters," the governor
said in a statement. "It builds in local control and options
while also ensuring the tools to protect communities and schools
districts' residents, students and taxpayers."
The law also includes appropriations for administrative
expenses, making it ineligible for a petition drive that could
result in its repeal by voters.
Because the new law will not take effect for 90 days, it
will have no immediate impact on eight cities and school
districts currently operating with emergency financial managers
and three cities, including Detroit, which are operating under
Even after it kicks in, the law keeps in place existing
state-appointed managers and any ongoing review process to
determine if a manager is needed, which is the case in Detroit.
Snyder on Dec. 18 named a review team for Michigan's largest
city, a step in a process that could lead Detroit to file what
would be the biggest-ever municipal bankruptcy.
That team, which met twice last week and is on an expedited
schedule to report to the governor, is continuing its work
despite the receipt on Thursday of a fiscal plan from the city,
according to Caleb Buhs, a spokesman for the Michigan Treasury
The Detroit Free Press reported on Thursday that a majority
of the nine-member city council believes Detroit's problems can
be fixed without a state-appointed manager. A spokeswoman for
Council President Charles Pugh said she had no information on
the plan and that Pugh was not available for comment.
Detroit was able to avoid an emergency manager by entering
into the consent agreement earlier this year that gave the state
more oversight of the city.
However, slow progress on reforms led state officials to
launch a review process earlier this month that could lead to a
manager, who could decide to take the city to federal bankruptcy
court unless the state blocks the move.