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Stand Up For Democracy State Wide Coalition Analysis Of Proposed Emergency Manager Replacement Law Ignores The Will Of The Voters Who Rejected Old Law

Same law, different day is proposed by right-wing leadership in Lansing

DETROIT, Dec. 10, 2012 /PRNewswire-USNewswire/ -- The organizers of the statewide coalition Stand Up for Democracy continue to urge state leaders to respect the will of voters who resoundingly rejected PA 4 aka the emergency manager law with a new replacement law. An analysis of that law that is expected to pass in the lame duck session this week demonstrates it is clearly that the same as the one voters rejected.

The analysis was created by Nick Ciaramitaro, a lobbyist for Michigan AFSCME Council 25. The organization is one of the partners in the Stand Up for Democracy statewide coalition.

Senate Bill 865 (H-5) analysis

Senate Bill 865 (H-5) will likely be considered by both the House and the Senate Tuesday.  The bill re-enacts many of the worst provisions of PA 4, in effect negating much the decision made by the people of the State of Michigan.  Worse, the proponents of this bill (including Governor Snyder) are misrepresenting much of its contents expecting that most legislators will not read the actual language of the bill.  Here is what the bill does.  To demonstrate the lengths to which the Snyder Administration will go to mislead voters I have put the portions of the bill that are identical to PA 4 in red in a copy of this text on the Michigan AFSCME Council 25 website.


Even the title of the bill belies the dishonesty of those who suggest that this is not re-enactment of PA 4.  In provides that this is a bill to (among other things):

  • "to provide for review, management, management, planning and control of financial operation of local units of government and school districts"
  • "to provide for the appointment and to prescribe the powers and duties of an emergency manager for a local unit of government or school district
  • "to provide for the modification or termination of contracts under certain circumstances"

The title also makes clear that the bill provides for an appropriation thereby nullifying the right of referendum.

­Section 1­

­The short title for the bill is the "local government and school district fiscal responsibility act"

Section 2


Section 3

Legislation intent language virtually identical to PA 4

Section 4

Provisions for preliminary reviews by the "state financial authorities" same as in PA 4 ("state financial authorities defined in Section 2 as the State Treasurer for municipalities and the State Superintendent of Public Instruction) to determine "probable financial stress" under same criteria as PA 4 including "other facts or circumstances … in the treasurer's sole discretion for a municipal government  … or .. in the state treasurer's or superintendent of public instruction's sole discretion for a school district …"

There is a brief 5-day "response period" provided for local governments to react to interim reports before the issuance of the preliminary report that may be new.

If there is a preliminary finding of probable financial stress a review team is formed.  The composition and responsibilities of the review team are the same as PA 4 except that the review team is not empowered to negotiate a consent agreement at this point.  Actions of previous review teams under PA 4 are ratified.  In fact, all prior acts are ratified. 

There continues to be no requirement that review teams comply with either the Open Meetings Act or the Freedom of Information Act.

Section 5

The bill requires that the review team hold at least one public "information" meeting in the local jurisdiction.  There is no requirement that any comments be taken from the public. 

Most of the rest of the powers and responsibilities including reporting and appeal procedures are essentially the same as PA 4.  This includes findings of "structural" operating deficits (undefined) and open ended, unsubstantiated conclusion of things that may happen in the future. 

The major change is that the review team is restricted to one of only two findings:  there is or there is not a "financial emergency."  This point becomes more significant later as the new proposal does allow options as will be explained later.

Section 6

This section deals with the Governor's determination based on the report of the review team and the appeal process is essentially the same as PA 4 except the determination is limited to the question of whether or not a financial emergency exists.

Section 7

This section contains the major change from PA 4.  Rather than a fiscal emergency triggering receivership, it triggers 4 options:

  • a consent agreement
  • an emergency manager
  • a neutral evaluation process
  • Chapter 9 bankruptcy.

Each of these options is explained in detail in subsequent sections of the bill.  The local government must make up its mind with 7 days (and an elected mayor must join in the agreement if there is one) but the default if no decision is made locally is the neutral evaluation process.

Section 8

Provisions concerning a consent agreement are essentially the same with one major exception.  A default can lead to either an emergency manager or the neutral evaluation process at the choice of the State Treasurer.  It also adds the power to waive the suspension of PERA (which currently exists under PA 4) to the State Treasurer.

Section 9

This section governs the appointment of an emergency manager and is essentially unchanged from PA 4 except that a local government is given the authority to remove an emergency manager by a 2/3 vote after one year in office.  Such action may but is not required to result in the removal of the unit of government from receivership.  In addition, a local unit of government may petition the State Treasurer or the Governor to remove an emergency manager in the first year.  The State agrees to assume the salary (but not expenses or other costs) of the manager.  All existing emergency financial managers are grand parented in.

Section 10

This section reinstates the powers of an emergency manager essentially the same as under PA 4. 

Section 11

This section reinstates powers of an emergency manager essentially identical to PA 4. 

Section 12

Reenacts all of the onerous powers of an emergency manager as provided in PA 4 including contract abrogation, dissolution of communities, usurpation of powers of local officials and more.

Section 13

Reenacts provisions of PA 4 suspending wages and benefits of local elected officials during receivership.

Section 14

Reenacts powers of an Emergency Manager of a school district as provided in PA 4.

Section 15

Requires the approval of the State Treasurer to sell assets valued at more than $50,000.  Reenacts provisions of PA 4 protecting collective agreement provisions for payment of benefits upon the active duty death of a police officer or firefighter.

Section 16

Provides for referral of criminal matters to the Attorney General and local prosecutor as in PA 4.

Section 17

Reporting requirements of an Emergency Manager similar to PA 4.

Section 18

Provisions for an emergency manager to recommend Chapter 9 bankruptcy to the Governor and the State Treasurer.

Section 19

This section is one of the few "concessions" made to the demand of the people of the state of Michigan for local democracy and even here they mess it up. 

The section requires that before an emergency manager abrogates a collective bargaining agreement, borrows money or sells assets with a value in excess of $50,000, he/she shall submit the proposal to the local government.  The local government has 7 days to approve or disapprove the action.  If it does not act, the action is considered approved.  If it disapproves, it has 10 days to submit a fiscally equivalent option to the local emergency financial assistance loan board who then have 30 days to pick one.  The members of the local emergency financial assistance loan board are three members of the Governor's cabinet including and chaired by the State Treasurer. 

Section 20

Immunity and Attorney general responsibilities essentially the same as in PA 4.

Section 21

Two year carry over for budget and working conditions as in PA 4 and 1 year carryover of ordinances as in PA 4 from end of receivership.

Section 22

Allows the governor to impose "best practices" (undefined), a model charter or model charter provisions (undefined) and management training as a condition to the end of receivership. 

Section 23

Provides for an "advisory board" that excludes all local participation to continue state intervention as a transition from receivership at the option of the governor.  The board "advises" mostly its own members.  It does provide for open meetings act and freedom of information act application to this board. 

Section 24

Allows the governor to appoint a new emergency manager on his own initiative upon recommendation of the transition board provided for above.

Section 25

Provides for a neutral arbitration option similar to a successful provision in California law with a number of seemingly harsh provisions including:

  • receivership if the local unit of government fails to send notice to all interested parties within 7 days of picking the option;
  • the unfettered right of the State Treasurer to reject a settlement reached through the neutral arbitration process;
  • inability to extend the process beyond 90 days when both parties agree that such an extension is warranted.

Section 26

Provides for ability of a local unit of government file under Chapter 9 of the federal bankruptcy act with the consent of the Governor. 

Section 27

Reenacts provisions of PA 4 concerning suspension of collective bargaining rights under receivership.

Section 28

Identical limitations on new taxes as in PA 4.

Section 29

Bulletin and rule authority for the State Treasurer and the State Superintendent of Public Instruction.

Section 30

Reaffirms all actions taken heretofore under PA 4 and 72.

Section 31

Grandparents all existing emergency managers and emergency financial managers

Section 32

Immunity for all state players.

Section 33


Section 34 and 35

Appropriations to prevent another referendum

Enacting section 1

Repeals PA 72.

Enacting section 2.

Legislative intent that this act is a successor statute to PA 4 and attempts to incorporate changes to other acts that only applied to PA 4. 


SOURCE Stand Up for Democracy

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