The Local Government and School District Fiscal Accountability Act has been in place since the late 1980s. Since then, it's permitted state appointed emergency financial managers for struggling municipalities. But in the last month, Governor Snyder has amended the act, and the changes have prompted confusion and concern.
Governor Snyder's amendment has two major misconceptions. One, that the state can swoop in and take over local government unannounced; and two, that collective bargaining rights for unions will instantly be cut. According to Snyder's reps, neither are the case, and the entire goal of the amendment is to step in sooner to prevent bankruptcy.
But the new power vested in emergency financial managers has raised some eye brows. Their new ability to cut collective bargaining concerns many local unions who fear they'll end up losing some of their rights, just as unions did in Wisconsin.
"Governor Snyder is doing exactly the same thing that Governor Walker's doing in Wisconsin, no doubt about it," said Marquette/Alger County MEA director, Stu Skauge. "The only difference is the tactics he's using."
But others who have studied Snyder's bill say it differs significantly from Wisconsin's law. While Wisconsin cut collective bargaining for all state workers, Snyder's proposal says collective bargaining could be cut on a case-by-case basis and only in communities that require state assistance.
"It does not void all collective bargaining, however, the financial manager does have the right to void collective bargained contracts by public employees during the crisis," said NMU Political Science Professor, Dr. David Haynes.
Haynes also addressed another major misconception about the bill. While many are under the impression that state officials simply deploy emergency financial managers as they see fit, Haynes says it's actually the cities in crisis that need to notify the state of their financial predicament.
"First, the local unit of government has to say to the state, we are having trouble here. The state, as I understand the law, cannot swoop in without the local unit of government, the elected officials and the appointed officials," Haynes said.
So it's the individual communities, not the state, that must initiate the action. And the communities can't ask for state help unless they hit one of 18 triggers which would indicate that the community is in serious financial stress.
Among those triggers: failing to abide by a deficit elimination plan or being saddled with a declining long-term debt rating.
There are several U.P. schools that could qualify for emergency financial managers if they are incapable of paying off their long-term debt.