LANSING, Michigan (Reuters) - A proposed repeal of Michigan's controversial emergency manager law, aimed at repairing finances in struggling cities and school districts, failed to make the November ballot after a tie vote by a four-member state elections panel on Thursday.

The commission's decision had been keenly awaited because a vote to let the referendum be put before voters would have suspended the emergency manager law pending the outcome of the vote.

A suspension would have called into question parts of the agreement reached early this month by Detroit to allow stricter control of its finances by the state, leaving the city with a diminished ability to address its many problems. The city, Michigan's largest, had avoided the appointment of an emergency manager under the agreement, but portions of the deal crafted with the state are tied to that law, known as Public Act 4.

A petition drive had collected over 226,000 signatures to repeal the 2011 law.

State election staff concluded that Stand Up for Democracy, a union-backed coalition that launched the repeal drive, had submitted enough valid signatures to get the measure on the November 6 ballot. But the two Republican members on the bipartisan state board of canvassers sided with another group of citizens who had challenged the petition over the type size used.

The Stand Up for Democracy coalition plans to ask the Michigan Appeals Court to order the Michigan secretary of state to place the referendum on the ballot, according to Greg Bowens, a spokesman for the coalition.

Opponents of the law object to the power it grants to essentially replace local elected officials with an emergency managers during a financial crisis.

The law beefed up the state's ability to intervene in financially troubled local governments and school districts and increased the power of emergency managers to control governments and void contracts and collective bargaining agreements, worrying municipal labor unions.

(Reporting By Aileen Wingblad; Additional reporting by Karen Pierog; Editing by Leslie Adler)