November 9, 2016, Introduced by Rep. Irwin and referred to the Committee on Government Operations.
A bill to amend 2012 PA 436, entitled
"Local financial stability and choice act,"
by amending the title and section 9 (MCL 141.1549) and by adding
section 7b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to safeguard and assure the financial accountability of
local units of government and school districts; to preserve the
capacity of local units of government and school districts to
provide or cause to be provided necessary services essential to the
public health, safety, and welfare; to provide for review,
management, planning, and control of the financial operation of
local units of government and school districts and the provision of
services by local units of government and school districts; to
provide criteria to be used in determining the financial condition
of local units of government and school districts; to authorize a
declaration of the existence of a financial emergency within a
local unit of government or school district; to prescribe remedial
measures to address a financial emergency within a local unit of
government or school district; to provide for a review and appeal
process; to provide for the appointment and to prescribe the powers
and duties of an emergency manager for a local unit of government
or
school district; to provide for the modification or termination
renegotiation of contracts under certain circumstances; to provide
for the termination of a financial emergency within a local unit of
government or school district; to provide a process by which a
local unit of government or school district may file for
bankruptcy; to prescribe the powers and duties of certain state
agencies and officials and officials within local units of
government and school districts; to create the office of the local
government financial emergency ombudsman; to prescribe the powers
and duties of the local government financial emergency ombudsman
and the legislative council; to provide for appropriations; and to
repeal acts and parts of acts.
Sec. 7b. (1) The office of the local government financial
emergency ombudsman is created within the legislative council.
(2) The principal executive officer of the office of the local
government financial emergency ombudsman is the local government
financial emergency ombudsman who, subject to this subsection,
shall be appointed by and serve at the pleasure of the council. The
ombudsman shall have a minimum of 3 years' experience in municipal
or school district operations.
(3) The council shall establish procedures for approving the
budget of the office of the local government financial emergency
ombudsman, for expending funds of the office, and for the
employment of personnel for the office.
(4) The ombudsman may commence an investigation upon either of
the following:
(a) Receipt of a complaint from an employee or resident of a
local government in a financial emergency or a legislator, or on
the ombudsman's own initiative, concerning any act that is alleged
to be contrary to law.
(b) The ombudsman's own initiative for significant public
health and safety issues and other matters for which there is no
effective remedy.
(5) Subject to council approval, the ombudsman shall establish
procedures for receiving and processing complaints, conducting
investigations, holding hearings, and reporting findings resulting
from the investigations.
(6) Upon request and without the requirement of a release, the
ombudsman shall be given access to all information, records, and
documents in the possession of the department, emergency manager,
or local government that the ombudsman considers necessary in an
investigation.
(7) Upon request and without notice, the ombudsman shall be
granted entrance to inspect at any time any premises under the
control of a local government in a financial emergency.
(8) The ombudsman may hold informal hearings and may request
that any person appear before the ombudsman, or at a hearing, and
give testimony or produce documentary or other evidence that the
ombudsman considers relevant to a matter under investigation.
(9) The ombudsman shall advise a complainant to pursue all
remedies open to the complainant. The ombudsman may request and
shall receive from the department, emergency manager, or local
government a progress report concerning the processing of a
complaint. After any action is taken on a complaint, the ombudsman
may conduct further investigation on the request of a complainant
or on his or her own initiative. The ombudsman is not required to
conduct an investigation on a complaint brought before the
ombudsman. A person is not entitled as a right to be heard by the
ombudsman.
(10) Upon receiving a complaint from a legislator or an
employee or resident of a local government in a financial emergency
under subsection (4) and deciding to investigate the complaint, the
ombudsman shall notify the complainant, the local government
affected, the emergency manager appointed for the local government
affected, if applicable, and the department. If the ombudsman
declines to investigate, the ombudsman shall notify the
complainant, in writing, and inform the emergency manager, if
applicable, and local government affected of the reasons for the
ombudsman's decision.
(11) Upon request of the ombudsman, the council may hold a
hearing. The council may administer oaths, subpoena witnesses, and
examine books and records of the department, an emergency manager,
or a person, partnership, or corporation involved, in accordance
with section 104 of the legislative council act, 1986 PA 268, MCL
4.1104, in a matter that is or was a proper subject of
investigation by the ombudsman under this act.
(12) Correspondence between the ombudsman and a complainant is
confidential and shall be processed as privileged correspondence.
The ombudsman shall maintain secrecy with respect to all matters
and identities of the complainants or persons from whom information
is acquired, except so far as disclosures may be necessary to
enable the ombudsman to perform the duties of the office and to
support any recommendations resulting from an investigation. A
report prepared and recommendations made by the ombudsman and
submitted to the council under subsection (13) are exempt from
disclosure under the freedom of information act, 1976 PA 442, MCL
15.231 to 15.246.
(13) Except as otherwise provided in this subsection, the
ombudsman shall complete an investigation within 90 days after the
date a complaint is received by the ombudsman. The ombudsman may,
in his or her own discretion and if considered necessary, extend
the time to complete an investigation by an additional 90 days, but
an ombudsman shall complete an investigation no later than 180 days
after the date a complaint is received by the ombudsman. The
ombudsman shall prepare and submit a report of the findings of an
investigation and make recommendations to the council within 30
days after completing the investigation if the ombudsman finds any
of the following:
(a) A matter that should be considered by the department.
(b) An action that should be modified or canceled.
(c) A statute or rule that should be altered.
(d) Actions for which justification is necessary.
(e) Significant public health and safety issues as determined
by the council.
(f) Any other significant concerns as determined by the
council.
(14) Subject to subsection (15), the council may forward the
report prepared and submitted under subsection (13) to the
department, the emergency manager, the local government affected,
or the complainant who requested the report.
(15) Before announcing a conclusion or recommendation that
expressly or by implication criticizes a person, an emergency
manager, or the department, the ombudsman shall consult with that
person, emergency manager, or department. When publishing an
opinion adverse to the emergency manager, the department, or any
person, the ombudsman shall include in that publication a statement
of reasonable length made to him or her by the emergency manager,
department, or person in defense or mitigation of the action if
that statement is provided within a reasonable period of time
determined by the council. The ombudsman may request to be notified
by the emergency manager or department, within a specified time, of
any action taken on any recommendation presented. The ombudsman
shall notify the complainant of the actions taken by the office,
the emergency manager, if applicable, and the department.
(16) The ombudsman shall submit to the council and the
legislature an annual report on the conduct of the office.
(17) A person, the department, or an emergency manager shall
not hinder the lawful actions of the ombudsman or employees of the
office, or willfully refuse to comply with lawful demands of the
office. If an emergency manager hinders the lawful actions of the
ombudsman or employees of the office, the ombudsman shall report
that to the council and the governor. The governor shall provide a
warning to that emergency manager. If an emergency manager
continues to hinder the lawful actions of the ombudsman or
employees of the office, that emergency manager shall be removed by
the governor and the local government shall select 1 of the other
local government options as provided in section 7.
(18) Employees of a local government shall not be penalized in
any way by an official, an emergency manager, or the department as
a result of filing a complaint, complaining to a legislator, or
cooperating with the ombudsman in investigating a complaint.
(19) The authority granted the ombudsman is in addition to the
authority granted under the provisions of any other act or rule
under which the remedy or right of appeal or objection is provided
for a person, or any procedure provided for the inquiry into or
investigation of any matter. The authority granted the ombudsman
shall not be construed to limit or affect the remedy or right of
appeal or objection and shall not be considered part of an
exclusionary process.
(20) As used in this section:
(a) "Complainant" means an employee or resident of a local
government in a financial emergency who files a complaint under
subsection (4).
(b) "Council" means the legislative council established under
section 15 of article IV of the state constitution of 1963.
(c) "Department" means the department of treasury.
(d) "Legislator" means a member of the senate or the house of
representatives of this state.
(e) "Office" means the office of the local government
financial emergency ombudsman created under this act.
(f) "Official" means an official or employee of the department
of treasury.
(g) "Ombudsman" means the office of the local government
financial emergency ombudsman.
Sec. 9. (1) The governor may appoint an emergency manager to
address a financial emergency within that local government as
provided for in this act.
(2) Upon appointment, an emergency manager shall act for and
in the place and stead of the governing body and the office of
chief administrative officer of the local government. The emergency
manager shall have broad powers in receivership to rectify the
financial emergency and to assure the fiscal accountability of the
local government and the local government's capacity to provide or
cause to be provided necessary governmental services essential to
the public health, safety, and welfare. Following appointment of an
emergency manager and during the pendency of receivership, the
governing body and the chief administrative officer of the local
government shall not exercise any of the powers of those offices
except as may be specifically authorized in writing by the
emergency manager or as otherwise provided by this act and are
subject to any conditions required by the emergency manager.
(3) All of the following apply to an emergency manager:
(a) The emergency manager shall have a minimum of 5 years'
experience and demonstrable expertise in business, financial, or
local or state budgetary matters.
(b) The emergency manager may, but need not, be a resident of
the local government.
(c) The emergency manager shall be an individual.
(d) Except as otherwise provided in this subdivision and
section 7b(17), the emergency manager shall serve at the pleasure
of the governor. An emergency manager is subject to impeachment and
conviction by the legislature as if he or she were a civil officer
under section 7 of article XI of the state constitution of 1963. A
vacancy in the office of emergency manager shall be filled in the
same manner as the original appointment.
(e) The emergency manager's compensation shall be paid by this
state and shall be set forth in a contract approved by the state
treasurer. The contract shall be posted on the department of
treasury's website within 7 days after the contract is approved by
the state treasurer.
(f) In addition to the salary provided to an emergency manager
in a contract approved by the state treasurer under subdivision
(e), this state may receive and distribute private funds to an
emergency manager. As used in this subdivision, "private funds"
means any money the state receives for the purpose of allocating
additional salary to an emergency manager. Private funds
distributed under this subdivision are subject to section 1 of 1901
PA 145, MCL 21.161, and section 17 of article IX of the state
constitution of 1963.
(4) In addition to staff otherwise authorized by law, an
emergency manager shall appoint additional staff and secure
professional assistance as the emergency manager considers
necessary to fulfill his or her appointment.
(5) The emergency manager shall submit quarterly reports to
the state treasurer with respect to the financial condition of the
local government in receivership, with a copy to the superintendent
of public instruction if the local government is a school district
and a copy to each state senator and state representative who
represents that local government. In addition, each quarterly
report shall be posted on the local government's website within 7
days after the report is submitted to the state treasurer.
(6) The emergency manager shall continue in the capacity of an
emergency manager as follows:
(a) Until removed by the governor or the legislature as
provided in subsection (3)(d). If an emergency manager is removed,
the governor shall within 30 days of the removal appoint a new
emergency manager.
(b) Until the financial emergency is rectified.
(c) If the emergency manager has served for at least 18 months
after his or her appointment under this act, the emergency manager
may, by resolution, be removed by a 2/3 vote of the governing body
of the local government. If the local government has a strong
mayor, the resolution requires strong mayor approval before the
emergency manager may be removed. Notwithstanding section 7(4), if
the emergency manager is removed under this subsection and the
local government has not previously breached a consent agreement
under this act, the local government may within 10 days negotiate a
consent agreement with the state treasurer. If a consent agreement
is not agreed upon within 10 days, the local government shall
proceed with the neutral evaluation process pursuant to section 25.
(7) A local government shall be removed from receivership when
the financial conditions are corrected in a sustainable fashion as
provided in this act. In addition, the local government may be
removed from receivership if an emergency manager is removed under
subsection (6)(c) and the governing body of the local government by
2/3 vote approves a resolution for the local government to be
removed from receivership. If the local government has a strong
mayor, the resolution requires strong mayor approval before the
local government is removed from receivership. A local government
that is removed from receivership while a financial emergency
continues to exist as determined by the governor shall proceed
under the neutral evaluation process pursuant to section 25.
(8) The governor may delegate his or her duties under this
section to the state treasurer.
(9) Notwithstanding section 3(1) of 1968 PA 317, MCL 15.323,
an emergency manager is subject to all of the following:
(a) 1968 PA 317, MCL 15.321 to 15.330, as a public servant.
(b) 1973 PA 196, MCL 15.341 to 15.348, as a public officer.
(c) 1968 PA 318, MCL 15.301 to 15.310, as if he or she were a
state officer.
(10) An emergency financial manager appointed under former
1988
PA 101 or former 1990 PA 72, and serving immediately prior to
the
effective date of this act, before
March 28, 2013, shall be
considered an emergency manager under this act and shall continue
under this act to fulfill his or her powers and duties.
Notwithstanding any other provision of this act, the governor may
appoint a person who was appointed as an emergency manager under
former 2011 PA 4 or an emergency financial manager under former
1988 PA 101 or former 1990 PA 72 to serve as an emergency manager
under this act.
(11) Notwithstanding section 7(4) and subject to the
requirements of this section, if an emergency manager has served
for less than 18 months after his or her appointment under this
act, the governing body of the local government may pass a
resolution petitioning the governor to remove the emergency manager
as provided in this section and allow the local government to
proceed under the neutral evaluation process as provided in section
25. If the local government has a strong mayor, the resolution
requires strong mayor approval. If the governor accepts the
resolution, notwithstanding section 7(4), the local government
shall proceed under the neutral evaluation process as provided in
section 25.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless Senate Bill No. ____ or House Bill No. 6030 (request no.
05679'16) of the 98th Legislature is enacted into law.