The Supreme Court opinion issued today ordering the Emergency Manager Law to be placed on the ballot is just the next step in the ongoing problem of what to do about cities and school districts in extreme financial distress. The law -- Public Act 4 -- will be suspended pending outcome of the election as soon as the question is certified by the State Board of Canvassers. As of now, the Board does not have a meeting scheduled.
State Treasurer Andy Dillon told reporters today that decisions made under the suspended act will continue in effect, although the law's challengers dispute that view. Dillon also said that once the referendum is certified the act that preceded it will again be in effect and that the governor will appoint three of the four current emergency managers to the post of emergency financial manager pursuant to the old act. The Flint emergency manager, Michael Brown, is ineligible to serve as an emergency financial manager under the old act. According to Dillon, the governor may ask the legislature to adopt a new emergency manager law as soon as August 15, when legislators return to Lansing. Superintendent of Public Instruction Mike Flanagan said he will nominate the three current emergency managers for school districts to continue to serve pursuant to the old act.
Detroit Mayor Dave Bing said today that the fate of the Emergency Manager Law will not disrupt the city's current plan to stabilize its finances:
We respect the Michigan Supreme Court’s opinion, protecting the constitutional right of citizens to use the petition process. However, the Financial Stability Agreement (FSA) remains in effect and is still a critical tool to help fiscally stabilize the city.
The City is bound by the FSA to continue to restructure city government (as required by Annex B) and to continue to execute the imposition of new labor terms (as allowed by Annex D). The imposition of the City Employment Terms remains valid.
The Financial Advisory Board will also remain intact as will its oversight function to make sure the City is moving forward in restructuring.
The court’s decision is not expected to affect the bond issue we need to maintain the city’s cash flow, and the city must complete the bond issue to fund city operations.
The bottom line is the City’s fiscal challenges remain, and Public Act 4 was one tool to help us. Without P.A.4, we will continue to execute our fiscal restructuring plan.