Pavlov bill to strengthen local finances and protect taxpayers passes out of Senate Education Committee

LANSING—The Senate Education Committee on Wednesday passed Sen. Phil Pavlov’s legislation requiring fiscal accountability and transparency on the part of local governments and school districts to protect taxpayers from long-term debt and possible bankruptcy.

Senate Bill 153, which creates the Local Government and School District Fiscal Accountability Act, would streamline the current process for appointing an emergency manager and empower that manager with the decision-making authority to set a community or school district in severe deficit on a swift path to financial recovery.

“In extreme situations, preventative steps must be taken to safeguard public interests and the public’s money,” said Pavlov, chair of the committee. “This reform will make the installation of an emergency manager a rare occurrence, but one that will ensure that vital services such as public safety and education are maintained and taxpayers are protected.”

Under Pavlov’s legislation, emergency managers would be authorized to negotiate contracts, undo burdensome costs, direct academics, rectify corruption on the part of local officials and recommend consolidation of local units.

As a safeguard, the bill would require a seven-step review and appeals process before the governor could declare a financial emergency, as well as various levels of oversight.

“Early intervention in these emergency situations can ensure a much better outcome,” said Pavlov, R-St. Clair Township. “By empowering the state to be responsive to local needs, this measure will help prevent fiscal catastrophes and actually strengthen local control and accountability.”

SB 153 now heads to the full Senate for further consideration.