Wolverine Blues

Meanwhile Michigan Governor Rick Snyder and key members of the legislature intend to introduce legislation today under which financially distressed Michigan cities and school districts could choose between mediation with creditors, bankruptcy or a state-appointed emergency manager—legislation intended to replace last year’s local fiscal distress law (Public Act 4) repealed by Michigan voters last month. Five cities and three school districts in Michigan currently operate with emergency managers under a prior 1990 law, which would be replaced by the new measure. Gov. Snyder fears the repeal of Public Act 4 left the state without enough ability to rescue cities and schools (and the federal government…) from insolvency. The new financial rescue proposal would retain the state’s power to declare financial emergencies in cities and school districts, but would also give local governments the options to reach a consent agreement with the state, similar to one Detroit has: mediation, an emergency manager, or a Chapter 9 federal bankruptcy filing. Under current Michigan law, the state must approve a bankruptcy request. The proposed new law would tie a Chapter 9 filing to a full state review of city or school district finances. While the new bill would reinstate broad powers for emergency managers, local officials would have authority to approve certain decisions made by the managers, or develop alternate solutions that produce equal savings. The proposal would also permit local officials to ask the governor to remove emergency managers after a year, or dismiss them with a two-thirds vote of the governing body, such as a city council.