Tuesday, June 16, 2015

Michigan Appeals Court limits authority of state-appointed emergency managers

Posted By on Tue, Jun 16, 2015 at 12:07 PM

State-appointed emergency managers cannot unilaterally ratify acts that were prompted by another government official, a unanimous Court of Appeals panel ruled on Friday.

The decision — the first to consider what, if any, limitations emergency managers (EM) have under state law — focused on former Flint EM Michael Brown's decision to raise water and sewer rates in violation of the city's ordinances. 

In 2012, Flint City Council President William Scott Kincaid, as well as three other residents, filed a complaint against Brown and the city after the EM increased water rates by 12.5 percent and sewerage rates by 45 percent. Those increases followed a smaller bump in rates that were already pushed the prior year. 

In the complaint, the residents argued Brown lacked the authority to enact the rate hikes under local ordinances.

Initially, in August 2011, former finance director Michael Townsend proposed slight increases to address a budget deficit — but the city violated its own ordinances, the appellate panel found, because officials failed  to post a notice of the increases 30 days in advance.

After Brown was appointed to oversee Flint, however, he ratified the rates implemented by Townsend, as well as the additional increase to city water fees by 12.5 percent and sewerage fees by 45 percent.

Judge Cynthia Stephens, who wrote the decision, said Brown's authority to enact Townsend's "unauthorized" increases was limited by state law. 

"Although the EM had the authority to institute the change in rates notwithstanding any charter provision to the contrary under the former [PA 4, the former EM law repealed in a 2012 referendum vote] ... the increases complied with the notice, publication and implementation guidelines of city ordinances however, does not support the action taken by the EM to expressly ratify and confirm the increases recommended by Townsend," Stephens wrote. "In that instance, the EM did not 'initiate' the steps to correct the condition by an affirmative act, but rather approved the steps already taken by someone else."

The panel said explicitly that EMs don't have as much authority as the state contends.

"We conclude that the Legislature did not delegate the power to ratify to an emergency manager," the opinion says.

It's unclear what the immediate impact of the decision may be; the state Treasury says it's still analyzing the opinion.

"While the Department continues reviewing the decision, we expect it will have little or no impact on the authority of current emergency managers," said Treasury spokesperson Terry Stanton.  

The case has been remanded to the lower court for new proceedings consistent with the panel's decision. Flint could still appeal the appellate panel's ruling to the Michigan Supreme Court. 

Update Tues. June 16, 2015, 3:25 p.m.: This story has been updated to clarify the named plaintiff's in the suit and identify William Scott Kincaid as Flint City Council's president. 

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