Emergency financial managers appointed by the state of Michigan to run struggling cities and schools would get broad new powers, including the ability to terminate union contracts, under legislation approved Tuesday by the Michigan House.
Republican Gov. Rick Snyder is expected to sign the legislative package after its main bill received final approval, 62-48, in the GOP-led chamber.
The contentious proposal, which drew hundreds of protesters to the state Capitol last week and highlighted a rally from a few dozen people inside the building late Tuesday, is the latest in a series of showdowns across the country pitting Republican state officials against union rights backers. The most visible one came in Wisconsin, where Senate Democrats fled the state to block _ albeit temporarily _ a vote on legislation stripping collective bargaining rights for public workers.
While the Michigan plan wouldn't go that far, many Democrats and labor unions argue it's a state power grab that could set up virtual dictatorships and strip power from local elected officials in cases when an emergency manager is appointed. They're also upset that an emergency manager could toss out union contracts to salvage a local entity's finances, which opponents consider an assault on collective bargaining.
"This isn't just about collective bargaining," said Lance Enderle, a Democrat who lost a bid to get elected to Congress last year and a leader of Tuesday's state Capitol protest. "This is about democracy."
The current state law related to emergency financial managers is affecting about a half-dozen local communities and schools at this time. Only Pontiac, Benton Harbor, Ecorse and the Detroit Public Schools have state-appointed emergency financial managers in place.
Critics of the new legislation say it could lead to far more cities and schools under control of more powerful emergency managers.
The plan sets up more triggers that would allow the state to review a local school district or government's finances. Supporters say the state could start reviewing the finances of troubled cities and schools earlier with the hopes of avoiding the appointment of an emergency manager.
"These measures will create a more focused, preventative approach to fiscal responsibility throughout the state," Rep. Al Pscholka, R-Stevensville, said in a statement. "For years we have allowed cities and schools to be on the verge of bankruptcy without any intervention. In many cases we discover that financial records are not in order and it leaves emergency managers with very few options to balance the books."
The law sets up multiple triggers that could spark a state review of a local government or school's finances. The triggers would include creditors with undisputed claims, defaulting on bonds, ending the year in a deficit or a resolution of the state House or Senate requesting a preliminary review, among other triggers.
The state treasurer's office says the bill would allow the state to get information from local governments and start preliminary reviews more quickly.
Supporters of the plan say many cases could be resolved without the appointment of an emergency manager. Ultimately, the governor would decide whether an emergency manager is appointed. The manager then could modify or end union contracts, order elections to raise or extend property taxes or take a host of other actions. A manager could recommend that local governments consolidate and with the governor's approval could "disincorporate or dissolve" a municipal government.
Some provisions in early versions of the legislation were dropped in the hopes of gaining broader support. Emergency managers would have to be individuals, not firms or corporations. The original version would have banned local elected officials in emergency manager situations from running for office again for up to 10 years, but that provision also was dropped.
Local elected officials would be stripped of significant powers, but supporters of the legislation say they could be removed from office only if they repeatedly refuse to comply with requests for information.