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Is The Emergency Manager Law Already, In Effect, Dead?

By Zachary Gorchow
Posted: December 28, 2016 10:41 AM

The question of whether the law empowering the governor to appoint emergency managers to run financially troubled local governments and school districts needs major changes or outright repeal has been a major aftershock of the Flint water crisis and especially so after Flint’s last two emergency managers were charged with multiple felonies.

Michigan has had some form of the law since 1990 when the first modern law allowing a governor to appoint an emergency financial manager was enacted. That law enabled the governor to in effect take control of a troubled community with local elected officials sidelined.

In 2011, one of the first major bills Governor Rick Snyder signed was PA 4 of 2011, which added significant new authority to what were now to be called emergency managers, most significantly the ability to unilaterally temporarily modify contracts with the local government’s or school district’s employees.

Voters repealed that law in a 2012 statewide referendum, but Mr. Snyder and the Legislature responded with PA 436 of 2012, the Local Financial Stability and Choice Act that exists today. The major changes were that it gave local governments and school districts the opportunity choose alternatives to an emergency manager, like a consent agreement with the state, and put a time limit on how long an emergency manager could serve.

For a time, these emergency managers ran about 10 of the state’s cities and multiple school districts.

Today, there none running cities and soon to be just one running a school district.

The Flint charges have added to the growing chorus of voices calling for wholesale changes or outright repeal of PA 436. Democrats and liberal activist groups have long called for such changes (and orchestrated the referendum that repealed the predecessor PA 4). The legislative committee on the Flint water crisis recommended consideration of a committee approach to financial emergencies with three people in charge instead of one, one with financial expertise, one with operational expertise and one to serve as a liaison to the public.

Richard McLellan, the Republican attorney, recently said in a Facebook post that the call for such dramatic changes or repeal might be right. Mr. McLellan said while the law was a thoughtful attempt to deal with local financial irresponsibility and the need for restructuring, “in retrospect, the singular focus on finances was a mistake and the cause of many unintended consequences.”

Mr. Snyder has defended the law, saying outside of Flint, it succeeded. He’s shown no desire to lead a reform effort, saying only he’s open to ideas. Republicans in the Legislature appear less than eager as well. The legislative committee’s recommendation for consideration of a committee produced nothing in the way of legislative action.

So the Local Financial Stability and Choice Act remains on the books, unchanged, and that could be the case for a while.

But some longtime Capitol-watchers are now noting the law, in effect, may be dead. Conservatives like John Truscott of the Truscott Rossman public relations firm and Charles Owens of the National Federation of Independent Business-Michigan have raised the question of who would agree to become an emergency manager now in the wake of the criminal charges former Flint Emergency Managers Darnell Earley and Gerald Ambrose now face.

Mr. Snyder himself seems disinclined to appoint new emergency managers, now preferring earlier, less dramatic intervention when local governments or school districts show signs of trouble or putting in place consent agreements that leave local elected and appointed officials in place with some enhanced powers.

What the future holds for PA 436, known unofficially as “the emergency manager law,” is unclear. But the Flint water crisis might have informally achieved what Mr. Snyder and the Republican-led Legislature so far have been unwilling to do – bring a halt to that law’s most dramatic powers.

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