The Michigan Supreme Court heard arguments in a case that could set some parameters on state-appointed emergency managers’ authority to change public employee contracts.
Back in 2012, the city of Pontiac was broke, and under the control of an emergency manager. The city missed a promised $3.5 million payment to a union-run police and fire retirees’ health insurance fund. So the emergency manager issued an executive order skipping the payment after the fact – as well as future payments.
Ronald Lederman is an attorney for the health fund. He told the justices an emergency manager can cut off future payments, but can’t say a past-due bill won’t be paid.
“The city was in default, essentially,” he said.
Lederman said an emergency manager can issue retroactive orders, but only with the explicit authorization of a state law that doesn’t currently exist.
Stephen Hitchcock argued for the city and the emergency manager. He says the Legislature granted emergency managers sweeping powers.
“You have to look at the authority that gives him the right to issue an executive order,” he said.
A decision from the state Supreme Court is expected no later than the end of this summer.
There is a separate federal lawsuit challenging the emergency manager law. That case is before the U.S. 6th Circuit Court of Appeals.
