A news service for the people of Michigan from the Mackinac Center for Public Policy

With five potential changes to Michigan's Constitution and one referendum on the November ballot, some proposals are bound to impact others.

The best example is how Proposal 2 impacts Proposal 1, if both issues pass. Proposal 2, which elevates union collective bargaining agreements over state law, will hinder the essential issue in Proposal 1: the powers given to emergency managers.

Proposal 1, the emergency manager referendum, asks voters to approve or reject Public Act 4 of 2011, the state’s emergency manager law. The vote has nothing to do with whether or not the state has the power to appoint a manager to control a local government facing crisis, however. Voting “no” on this bill does nothing for local control since it would reinstate the state’s older emergency financial manager law.

This older law was expanded upon in Public Act 4. One of the most material changes to the old law was the ability of an emergency manager to amend the local government’s collective bargaining agreements unilaterally, given a series of conditions and approval by the state Department of Treasury. While this provision has only been exercised in only three governments, it’s also saved those governments over $100 million annually, substantial savings for governments struggling to pay their bills.

Proposal 2, however, would strip emergency managers of their ability to amend these agreements. By giving authority to union collective bargaining agreements over state laws like Public Act 4, it is likely that emergency managers will be unable to amend these agreements.

While each local government is a little bit different, most local governments spend the majority of their expenses on labor costs. In Michigan, where 55 percent of the government sector is unionized, this means that collective bargaining agreements are major expenses.

In addition to the considerable expense of the labor contracts themselves, there's another factor that leads local governments to look at these agreements last when fiscal troubles arise. There’s a concentrated effort from unions to get their people elected to school boards, city councils, and county commissions.

There are a number of new powers offered to emergency managers in Public Act 4. But Proposal 2 would eliminate one of those new powers that resolve fiscal problems in struggling governments.

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See also:

Proposal 1: Referendum on the Emergency Manager Law

Proposal 2: The 'Collective Bargaining' Amendment

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