CHICAGO — Michigan Treasurer Andy Dillon wants lawmakers to pass a new emergency management law after Friday's state Supreme Court ruling that suspends the current law.
After months of debate over petition font sizes, Michigan's high court ruled Friday that a referendum to overturn the current law, Public Act 4, must be allowed on the November ballot.
The ruling means that the law, which outlines state authority over troubled municipalities, will be suspended once the State Board of Canvassers approves the petition, expected sometime next week.
Michigan officials, including Gov. Rick Snyder and Attorney General Greg Zoeller, have said the suspension means the automatic revival of the previous law authorizing state oversight of troubled municipalities, called Public Act 72. That opinion will likely be challenged in court.
But in the meantime, Dillon urged lawmakers to take up an existing bill that would create a new emergency management law. If approved, the new law, Public Act 76, would have the effect of nullifying not only the suspension but a successful repeal of the current law in November.
"It's a chance for more dialogue," Dillon said at a press conference Friday afternoon. "Anytime you pass a law you're going to find things you can improve on. Public Act 76 is an enhancement of Public Act 4. It's up to the Legislature if and when they pass it — but as treasurer I would strongly encourage them to do that."
Key to the current law, and any future law, is an emergency manager's ability to unilaterally amend or terminate labor contracts. The previous law did not give emergency managers that authority.
"You have to have that power," Dillon said. "In virtually every troubled local unit, 75% to 80% of costs are [from labor contracts]. You have to be able to modify them; if you can't you will start to see what you are seeing in California now."
The new law would also allow for the creation of a financial advisory board, like the powerful nine-member board that currently oversees Detroit. The creation of a similar board for all state-controlled municipalities would allow for an easier transition for the emergency manager to leave, Dillon said.
"We don't like to have managers in for any longer than they have to be, ideally it's less than a year," he said. "We like the concept where there's a financial advisory board to help with the transition out."
Legislators could vote on the bill as early as Aug. 15.
The suspension of the current law will have little impact on Detroit, Dillon said. The city narrowly avoided a state takeover in March when it crafted a consent decree with the state. Most of the powers outlined in the consent decree are not tied to Public Act 4, according to the treasurer.
It also will not affect the city's planned $137 million bond deal, a refinancing planned for August through the Michigan Finance Authority that is crucial to the city's cash flow. The deal had been set for late July but an ongoing dispute with Detroit's top attorney stalled it.
Dillon said Friday that the city's attorney has indicated she will sign off on the documents, allowing the deal to be done before the end of August.
There are four cities and three school districts under emergency management in Michigan. Once the board of canvassers approves the petitions, state officials will reappoint three of the four existing emergency managers as emergency financial managers under previous Public Act 72.
The emergency manager of Flint cannot be reappointed because he served as the city's mayor within the last five years, which disqualifies him under the old law. Dillon said the state has selected a replacement, but would not name him.
