Life after Public Act 4

Regardless of whether Public Act 4 of 2011 or Public Act 72 of 1990 becomes the prevailing emergency intervention act, municipalities will still need to work on finding ways to balance their budgets and provide services to their residents.

Public Act 4 of 2011 was created to replace Public Act 72 of 1990, the Local Government Fiscal Responsibility Act. The primary difference between the two acts is that Public Act 4 gives state-appointed emergency managers the power to dissolve and/or amend labor contracts. This significant difference has caused a successful petition drive by opponents of the Act that has resulted in the suspension of Public Act 4 until the November 2012 election so voters can decide if the act should remain.

The suspension of Public Act 4 has raised many questions, especially for those emergency managers operating under its authority. The Governor’s position is that in the absence of Public Act 4, Public Act 72 goes back into effect and has reinstated emergency financial managers under the old act. The issue will more than likely result in litigation between the supporters and the opponents of the Public Act 4.

The bigger issue is the financial stability of some municipalities in Michigan. Declining property values, limited development and shrinking populations have challenged the long term financial stability of several communities, including Michigan’s largest City-Detroit, which is operating under a State negotiated Consent Agreement. The City of Ecorse is concluding the efforts of an emergency manager, while other communities like Allen Park are asking for State intervention.

Regardless of whether P Public Act 4 or Public Act 72 becomes the prevailing law of the state after the November election, the real issue will still be finding ways for financially stressed local units of government to balance their budgets and still provide basic services to their respective constituents.

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