With dozens of cities and school districts across the state struggling under the weight of unfunded liabilities and unsustainable cost structures, Governor Rick Snyder today signed legislation that will allow the state to assist earlier when local units of government are in financial distress instead of waiting until they are on the brink of bankruptcy. The move will ensure residents are not cut off from basic services and protect taxpayers from having to bailout municipalities that fail to take action.
At the bill signing, Snyder praised lawmakers for making tough decisions even in the face of vocal opposition from those in favor of keeping the status quo.
"For too long in this state we've avoided making the tough decisions. But waiting limits options and makes the solutions much more painful," Snyder said. "The goal is to allow the state to intervene at an earlier stage so that the need for an emergency manager can be avoided altogether. If, however, an emergency manager is needed, then they need the tools to properly address these challenges."
The six bills signed by Snyder will update Public Act 72 of 1990, also known as the Emergency Financial Manager act, by:
--Establishing more extensive criteria for review of a local government to indicate fiscal problems earlier and more clearly. There will be 18 triggers that can prompt a preliminary review, up from the current 14;
--Creating a process for reaching a consent agreement that would provide enhanced powers for current local unit administrators to deal more quickly with financial distress;
--Providing a 30-day window, at the beginning of the consent agreement, for collective bargaining to take place to deal with fiscal distress; and
--Granting broad powers to the emergency manager if a local government is in receivership.
A local government is removed from receivership when the financial conditions which brought about the financial emergency are corrected in a sustainable fashion.