CRC report addresses Financial Emergencies in Michigan Local Governments

 

The Citizens Research Council of Michigan has released a report exploring the options available to local governments facing financial emergencies.

"A number of local government officials in fiscally distressed communities have in recent months used the terms 'bankruptcy' and 'receivership.' Use of these words may express the level of concern those officials have, or wish to convey, about the financial condition of their communities, but they are not particularly accurate or appropriate in the context of Michigan local government," according to Senior Research Associate Bettie Buss.

Financial Emergencies in Michigan Local Governments describes the options available to fiscally distressed municipalities, including an in-depth description of Michigan's Local Government Fiscal Responsibility Act and Chapter 9 of the Federal Bankruptcy Code. The report also defines key terms including: emergency financial manager, in default, judgment levy, insolvency, bankruptcy, and receivership.

"Bankruptcy should be avoided at all costs," says CRC President Jeffrey Guilfoyle, "the bankruptcy of one of Michigan's local governments could impact the access to credit markets for all of Michigan's governments. Local leaders and the state should explore every possible option before even contemplating a bankruptcy filing, and they should never view a bankruptcy filing as an easy solution to a government's financial problems."

Read the report and its summary…