Sen. Pavlov Floor Statement on the Local Government and School District Fiscal Accountability Act

Thank you, Mr. President.

Mr. President,

I would like to speak for a few moments about some very important legislation on its way to the governor for his signature: the bills known as the Local Government and School District Fiscal Accountability Act.

Some may refer to these measures as the Emergency Manager legislation, but that is a bit of a misnomer. The bills do include provisions for the appointment of emergency managers when necessary, but emergency managers are not the focus.

The focus is on identifying fiscal problems early, before emergency managers are required, so that finances can be strengthened, services can be provided, and taxpayers can be protected.

These bills will promote such early intervention. There are more than a dozen triggers in place to notify the state of entities needing assistance. These, along with the safeguards of review, appeals, and oversight, mean the appointment of emergency managers should be a rare occurrence.

Communities and school districts sometimes struggle. Under the Local Government and School District Fiscal Accountability Act, we can help those in economic distress resolve their financial troubles before an absolute crisis occurs-and long before an emergency manager becomes necessary.

When problems are identified and a community refuses to take the steps necessary to avoid a potential financial catastrophe-that is when the state must intervene and appoint an emergency manager.

In those cases, to help guarantee success, emergency managers must be given the power to make the tough, but necessary decisions to restore financial integrity.

Let's be clear about what is – and is not – in these bills:

  • The bills specify that an emergency manager must be an individual, not a firm.
  • They do not contain a prohibition on local officials running for future office.
  • They do contain a number of provisions to protect healthy, well-managed pensions. They safeguard death benefits for first-responders. They recognize vested pension benefits.
  • They allow for renegotiation with bargaining units. If renegotiation fails, then they allow for dissolution of contracts and the negotiation of replacement contracts. They do not eliminate collective bargaining.
  • And finally, they provide legislative oversight of emergency managers with the ability to remove them.

It is important to remember that the act this legislation replaces was originally enacted in 1990, and signed into law by Governor James Blanchard, a Democrat. In the twenty years since, only a handful of emergency managers have been appointed, and those by both Republican and Democrat governors. Ensuring fiscal accountability in our local governments and school districts is not a partisan issue – it's just plain good policy for the state of Michigan.

Helping local communities thrive is the goal of everyone in this room. I have no doubt of that. These bills will help us achieve that goal.