What does a “yes” vote on Proposal 1 mean?
Voting “yes” on a referendum lifts the suspension on the legislation in question. In this case, voting “yes” on Proposal 1 will reinstate the Emergency Manager law, Public Act 4 of 2011, while voting “no” will nullify the legislation.
Does this law newly allow the state to take-over a local unit of government?
The state can appoint an emergency manager to operate a local government only if the unit is facing a financial emergency and does not have a plan to resolve its conflict. The state mandates that all governments in Michigan balance their budgets, and nearly every government meets this mandate or has a plan to eliminate their deficit. When governments are facing fiscal problems, the state can assist them by raising money and borrowing from future revenue sources to help pay their bills. But some governments are resolute on fiscally unsustainable courses, in which case the state may appoint an emergency manager.
There has been an emergency manager law since 1988, but the 2011 law grants greater authority to the appointed emergency manager.
Even before that, Michigan courts have appointed receivers to control local governments that had substantial financial problems.
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What can an Emergency Manager do that an Emergency Financial Manager cannot?
There are a couple of changes to the state law guiding the powers of an emergency manager. The emergency manager can set aside staffing restrictions etched into collective bargaining agreements and charters, amend government contracts and remove pension fund trustees if the pension plan is underfunded.
Perhaps the most meaningful change is the ability to amend government employee collective bargaining agreements in certain situations. (See Sec. 19(1)(k) of the law for details.)
Additional sections of the new law make explicit powers that were implicit under the old law. These include utilizing all the powers of local officers and elected officials, to consolidate government services, and to work with creditors to restructure debt.
The state attorney general stated after the petition putting Public Act 4 of 2011 up for referendum was certified that the state’s old law, the Emergency Financial Manager law (Public Act 72 of 1990) would be reinstated. This has been happening as the previous Emergency Managers have been reauthorized as Emergency Financial Managers.