Emergency financial manager law heads to the ballot

Following months of argument between competing sides over petition font size, Michigan voters on Nov. 6 will determine whether a controversial state law giving expanded and sweeping powers to emergency financial managers (EFMs) should be repealed.

The Michigan Supreme Court in a 4-3 vote on Friday, Aug. 3 decided that Stand Up For Democracy, the group pushing for the repeal of Public Act (PA) 4 of 2011, met the legal threshold to appear before voters in November when it turned in over 226,000 petition signatures earlier this year, well over the minimum 161,305 signatures that were needed to get the referendum on the November general election ballot.

At issue was the size of the font on the petition headings. Citizens for Fiscal Responsibility, a group opposed to the referendum on the Local Government and School District Fiscal Accountability Act, argued that the petition headings did not meet statutory requirements of 14-point type, a contention that Stand Up For Democracy denied.

That issue prompted a 2-2 deadlock along party lines on the Michigan Board of Canvassers, which is comprised of two Democrats and two Republicans. Following the tie vote on April 26, Stand Up For Democracy on May 3 filed a complaint before the state Court of Appeals in order to force the Board of Canvassers to place the referendum on the Nov. 6 general election ballot.

The Court of Appeals, in a unanimous opinion, ruled that the measure should be placed before voters despite the petition only “substantially” complying with statutory requirements. The appellate jurists said they were bound by previous precedent set in a 2002 case, Bloomfield Township vs. Oakland County Clerk, which established that substantial compliance is sufficient for a ballot proposal to appear before voters.

However, the appellate judges also deemed that the Bloomfield case was wrongly decided, so they polled fellow appellate judges to determine whether a special seven-judge panel should be convened to rehear the case, possibly coming down with a different ruling than what had been previously decided. But on June 14, the Court of Appeals determined that such a panel would not be convened.

Citizens for Fiscal Responsibility then took the matter to the state Supreme Court, asking it to reverse the Court of Appeals ruling and overrule the Bloomfield decision.

“Once this decision is certified by the board of canvassers, Public Act 4 will be suspended and the previous state law governing emergency financial managers, Public Act 72 of 1990, will govern,” said Michigan Attorney General Bill Schuette.

Yet attorneys for Stand Up For Democracy, including Herbert H. Sanders, reportedly contend there are no legal grounds for the state reverting back to operating under PA 72, particularly since the enacting legislation for the law’s 2011 expansion repeals PA 72 of 1990.

Sanders did not return a call for comment prior to press time.

“While I fully support the right of all citizens to express their views, suspension of the Local Government and School District Fiscal Accountability Act may adversely affect Michigan communities and school districts mired in financial emergencies,” said Gov. Rick Snyder in a statement issued following the Supreme Court’s ruling. “It promises to make eventual solutions to those emergencies more painful.”

The petition circulated throughout Michigan read as follows:

“A petition for a referendum election to repeal Public Act 4 of 2011, which allows the governor to declare a local government or school district in receivership and appoint an emergency manager to take control with the following powers, among others: to assume the powers of local elected officials; to take control of revenue and spending; to terminate, modify and renegotiate contracts; to refuse to bargain with the employee representatives; to take control of employee pension funds under certain circumstances; and with the governor’s approval, to sell public assets or dissolve a city, township or county. This referendum proposal is to be voted on at the General Election, November 6, 2012.”

The law has garnered national attention from left-leaning news hosts who contend that it strips people of their constitutional right to choose their representatives in local government.

The emergency financial manager law has had local implications, as Waterford Township and the city of Pontiac essentially merged their fire departments after Louis Schimmel, Pontiac’s EFM, floated the idea to township officials.

Township Supervisor Carl Solden said he believes that the fire services contract brokered between the city and township less than a year ago will remain in effect, even though PA 4 has reverted back to its original form of PA 72 of 1990.

“I’m sure (the agreement) will (stay in place),” Solden said. “(Even though) it was an emergency manager that took care of it, it was more of an amicable deal with the unions. They didn’t fight it and it wasn’t pushed down their throat.”

The deal was expected to save the cash-strapped city of Pontiac millions of dollars and net a significant revenue boost for the neighboring township.

Effectively, PA 4 of 2011 institutes a 12-step process by which a state-appointed official intervenes in the fiscal well-being of a community or school district and comes up with a written plan to address underlying causes of what the state considers a financial emergency.

After several steps, if there is confirmation that a financial emergency exists, the governor is required to declare a local government in receivership and appoint an emergency financial manager, who serves at the pleasure of the state’s chief executive.

Upon being placed in receivership, both the chief executive officer and governing body of a local government in receivership are prohibited from exercising any powers of their offices without written approval of the emergency financial manager. Their compensation and benefits are also eliminated.

Within 45 days of being appointed, the EFM is required to develop a written financial and operating plan. A local unit of government is removed from receivership when the financial conditions on which the underlying financial emergency was founded are corrected in a sustainable fashion as determined by the state treasurer.

The state Board of Canvassers has yet to ratify the 226,000-plus petition signatures reportedly in support of the referendum.

In addition to the proposal to repeal the emergency financial manager law, several groups have submitted petition signatures to get a half-dozen other proposals on the Nov. 6 general election ballot.

Among those proposals are one that would allow for up to eight new casinos in Michigan, one that would establish a constitutional right to collectively bargain, one that would require voter approval of a new bridge from Detroit to Canada, another that would require that 25 percent of the state’s electricity comes from renewable energy sources, and another that would require two-thirds approval from both chambers of the state Legislature or a vote of the state’s electorate before any tax increase could be imposed.

None of those have yet been certified to appear on the general election ballot.

The most recent campaign finance reports filed with the Michigan Secretary of State’s Office show that Stand Up For Democracy has brought in about $184,000 in contributions during the election cycle so far, while Citizens for Fiscal Responsibility has received $25,000.