Emergency Manager Law, Emergency Managers — March 13, 2012 at 10:40 am

Indiana House of Representatives passes Emergency Manager bill, heads to Governor to become law


There goes another one, just like the other one…

As I wrote about in January, the Indiana Senate decisively passed an Emergency Manager bill similar to but different than Michigan’s Emergency Manager Law. The vote was 48-1. Last Friday, the Indiana House passed the Emergency Manager bill unanimously, 96-0.

Local governments and school corporations in financial distress could ask a state board to appoint an emergency manager to fix their finances under legislation approved by the Indiana General Assembly Friday.

House Bill 1192 empowers an emergency manager appointed by the Indiana Distressed Unit Appeals Board to reduce spending, cut payroll and renegotiate contracts without first obtaining the consent of elected officials.

The emergency manager could not raise taxes, but would hold power until the financial distress was resolved.

State Sen. Ed Charbonneau, R-Valparaiso, sponsored the legislation because he said the state’s property tax caps have put significant financial pressure on local governments.

It’s interesting that, like in Michigan, the state government is strangling local municipalities by either taking away revenue sharing or by limiting how much they can collect in taxes, putting many of them, particularly those in areas hard hit by the recession and a fleeing manufacturing base, in an emergency situation. All that’s left to do now is blame the unions.

As I wrote about before, this legislation more closely resembles the prior iteration of Michigan’s Public Act 4. However, all it took was for GOP majorities on both houses of the legislature and in the governor’s office to make it more anti-democratic, anti-union, and pro-privatization. From my earlier post:

Under the bill, Senate Bill 355, Emergency Managers have the power to, among other things, do the following:

  • Review existing labor contracts
  • Renegotiate existing labor contracts and act as an agent of the political subdivision in collective bargaining.
  • Reduce or suspend salaries of the political subdivision’s employees.
  • Enter into agreements with other political subdivisions for the provision of services.

The bill differs in a few significant ways from Michigan’s Public Act 4. First, the “political subdivision” must request a designation as “distressed” by filing a petition with the Distressed Unit Appeal Board. In Michigan, a “financial emergency” can be called by the state itself and does not require the municipality or school district to ask first.

Second, it does not allow the Emergency Manager to dismiss the entire elected government or even eliminate the municipality or school district as Michigan’s law does. However it does allow them to “assume and exercise the authority and responsibilities of both the executive and the fiscal body of the political subdivision concerning the adoption, amendment, and enforcement of ordinances and resolutions relating to or affecting the fiscal stability of the political subdivision.”

Finally, if passed into law, Indiana’s Emergency Mangers would report to the chairperson of the Distressed Unit Appeal Board rather than the State Treasurer as in Michigan.

That said, Michigan’s Emergency Manager law went through two previous incarnations before it ended up where it is today. If you are in Indiana, I highly suggest you follow this closely. It’s a very slippery slope that can lead to anti-democratic disenfranchisement of your poorest residents.