And the new law gives local governments more control
Bankruptcy Judge Steven Rhodes said the Legislature "thumbed its nose" at voters by passing a new emergency manager law after voters rejected a previous emergency manager law. But the new legislation did, in fact, respond to the message that voters gave Lansing policymakers.
The vote rejected the emergency manager law and reinstalled the state's older emergency financial manager law. As I wrote after the law was rejected, the EFM had a series of technical flaws that made it important to rewrite.
It was unclear what voters meant by rejecting the EM law. What the referendum did was different from what the referendum's supporters said. What it did was reinstall the EFM law, which allowed the state to appoint a manager. What the referendum's supporters complained about was the state's ability to control a government.
This put Legislators in a bad position of having to either believe what voters actually did or the reasons that they voted for it.
They chose to reflect voters' intentions. The new law gives local governments more control over whether an emergency manager exists and remains. They now can be rejected after 18 months and local governing boards can appeal decisions made by emergency managers.
There also are new options for addressing insolvency that do not require emergency managers. The legislation added two new options for addressing insolvency: neutral evaluation and a direct option to enter bankruptcy (instead of having to go through an emergency manager first).
States need an insolvency prevention policy. They set the rules for all local governments to follow and it's a good rule to get your governments to pay their bills. Voters had the chance to directly weigh in on this policy, and while unclear with their message, Legislators responded to their wishes.