LANSING – A top Wall Street rating agency has praised the state’s new controversial emergency manager law, calling it a positive credit move for Michigan and local governments.
Governor Rick Snyder signed the laws last week, following contentious legislative debate and large, loud public protests, that could give emergency managers broad powers to correct financial problems in a community or school district.
Snyder and supporters said the new laws should, in fact, minimize the need for an emergency manager because it will give the state a head’s up on potential financial problems in local governments, and allow for joint efforts between the state and the local governments to fix problems.
Moody’s Investors Services issued a statement this week, saying: “This change in legislation is credit positive for financially distressed municipalities in Michigan, as it provides them with broad technical assistance sooner, and permits sweeping organizational and financial changes.”
One provision in the law that raised the greatest concern, that would allow a manager to cancel union contracts, “could have a significant impact on the budget of a distressed municipality since the majority of expenditures typically come from employee compensation,” Moody’s said.
And with the state’s ongoing economic troubles, even well-managed communities could have problems and could benefit from assistance the laws could allow, Moody’s said.
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