* Public Act 4 to be suspended, replaced by weaker law
* Detroit mayor says city pact with Michigan unaffected
* Plan to issue bonds for Detroit to proceed
By Karen Pierog
Aug 3 Michigan voters in November will decide
the fate of a law that gave the state more control over
struggling local governments after a court on Friday gave them
the chance to repeal it.
Michigan officials said that once the measure is officially
certified for the Nov. 6 state-wide ballot as directed by the
state supreme court, the 2011 law known as Public Act 4 will be
suspended and a former, weaker, emergency manager law will
replace it in the interim.
Parts of an April financial stability agreement between
Detroit and the state depend on Public Act 4, which boosted
Michigan's ability to intervene in financially troubled local
governments. The law gave state-appointed managers enhanced
powers to run those governments, including the ability to
suspend collective bargaining agreements. Four Michigan cities
and three school districts have emergency managers, while two
other cities besides Detroit have consent agreements.
Governor Rick Snyder said the law's suspension will limit
the state's ability to give early aid to troubled governments
and will eliminate key tools for emergency managers to fix
"It promises to make eventual solutions to those emergencies
more painful," the Republican governor said in a statement.
"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," Snyder added.
Detroit Mayor Dave Bing said the city's agreement, which
created an oversight board, remains in effect, along with a 10
percent wage cut and other benefit and work rule changes imposed
on unionized workers last month as a way to save $102 million
for the cash-strapped city.
Michigan Treasurer Andy Dillon told reporters in a
conference call that "the vast majority" of Detroit's financial
stability agreement will remain intact".
Dillon said that plans are proceeding to sell long-term
bonds by the end of August to raise $137 million to repay an $80
million interim borrowing for Detroit and improve the city's
cash flow. He also said that actions taken by emergency managers
while Public Act 4 was in effect will survive.
Emergency managers in most other cities and school
districts, however, will have to be reappointed as emergency
financial managers, who will have lesser powers, according to
Dillon said it was also possible the Michigan Legislature
could act this month on a new emergency manager law that could
be crafted with input from public worker unions.
Greg Bowens, a spokesman for the union-backed Stand Up for
Democracy coalition that spearheaded the petition drive for the
law's repeal, said replacing Public Act 4 with a an old,
repealed law or passing a new law would "subvert the will of the
The coalition had collected enough valid signatures on
petitions for ballot certification, but questions over whether
the proper type size was used on the petitions led the matter to
the Michigan Supreme Court, which heard arguments last week.
Meanwhile, Dillon conceded that the law's suspension will be
viewed negatively by credit rating agencies.
Fitch Ratings on Friday warned of uncertainties for Michigan
governments should the repeal measure make the ballot and raised
concerns that Detroit's fiscal pact could be weakened or
nullified if Public Act 4 were repealed.