Proposed Emergency Manager Replacement Moves Ahead

By JEFF KAROUB, Associated Press

LANSING (AP) - A Republican-led state House panel approved a proposed replacement Thursday for an emergency manager law rejected by Michigan voters, despite concerns of critics who argued the process was rushed and the legislation subverts the will of the electorate.

The House Local, Intergovernmental and Regional Affairs Committee voted 9-5 along party lines, with one abstention, on what's known as The Local Financial Stability and Choice Act. The legislation now goes to the full House for consideration.

Republican Gov. Rick Snyder and legislative leaders unveiled the plan late Wednesday. The plan gives four choices to communities and school districts found to be in a financial emergency: accept an emergency manager, Chapter 9 bankruptcy, a mediation plan the state describes as a "neutral evaluation process" or a consent agreement with the state similar to the one in Detroit.
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 governor and leaders of the GOP-controlled Legislature sought a quick replacement to the law voters decisively rejected in November. 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.

State Treasury officials argued Thursday that the law now being used doesn't allow the state-appointed manager to make any changes to the cost structure of a struggling local government. The proposed replacement retains many elements of the rejected law but "injects a great deal of choice to local units of government," Howard Ryan, the department's director of legislative affairs, said Thursday.

"This is a much more sophisticated process than we had before," Ryan said.

Detroit Democratic Rep. Maureen Stapleton said she doesn't deny the financial crisis facing many cities, including hers, but she said such legislation punishes those communities because of factors outside their control, including the recent economic downturn and disappearing state funds.

"We're using sticks instead of carrots to fix it," she said.

The leader for Stand Up for Democracy, the coalition that turned in more than 200,000 signatures to get the referendum on the ballot, said he was shocked to hear about the proposed alternative. Brandon Jessup said his group met recently with a Snyder administration official and offered several recommendations, including mediation as a first option, but nothing came of it. He first saw the proposal late last night.

"(The legislation) does not represent the will ... of voters," he said.

The proposal was announced 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.

Emergency 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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