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Summary of Statutes Involving Local Units of Government
The following are summaries of Public Acts that concern units of local government and their fiscal activities. Note: this is not a complete listing of all acts containing information on local governments, just those that are often referenced by the department of Treasury in meetings with local government officials and state officials.
- Public Act 2 of 1968, the Uniform Budgeting and Accounting Act
- Requires units of local government to maintain a uniform chart of accounts for financial management and reporting purposes.
- Authorizes the Department of Treasury to perform internal control reviews to ensure compliance with uniform chart of accounts.
- Requires units of local government to file with the Department of Treasury annual financial and annual audit reports within 180 days of the unit of local government's fiscal year end.
- Requires units of local government to follow uniform procedures with regards to annual budget formulation, adoption, and monitoring.
- Public Act 243 of 1980, the Emergency Municipal Loan Act
- Establishes the Local Emergency Financial Assistance Loan Board.
- Authorizes the Board to issue emergency loans to units of local government that satisfy statutory criteria.
- Except in specific instances, units of local government are limited to a maximum of $3 million in any one fiscal year of the unit of local government and are limited to no more than five emergency loans during any ten-year period.
- Public 80 of 1981, the Fiscal Stabilization Act
- Authorizes the State Administrative Board to approve the issuance of bonds by units of local government to resolve accumulated operating deficits.
- The maximum amount of bonds issued by a unit of local government under the Act cannot exceed three percent of the state-equalized valuation of real and tangible personal property in the unit of local government for unlimited general obligation debt or of limited tax general obligation bonds, or a maximum principal amount of $125 million for all fiscal stabilization bonds.
- Fiscal Stabilization Act is intended to complement Emergency Municipal Loan Act in that former is intended to address situations where accumulated deficit exceeds what can be borrowed under the latter.
- Fiscal Stabilization Act also is intended to complement Revised Municipal Finance Act in that former is intended to address situations where deficit exceeds what can be funded through tax-anticipation notes issued under the latter.
- Public Act 436 of 2012, the Local Financial Stability and Choice Act
- Authorizes the State Financial Authority (State Treasurer or State Superintendent) to conduct preliminary reviews of the financial conditions of units of local government upon the occurrence of any one of 19 statutory conditions.
- Authorizes an appointed Financial Review Team to conduct a full review of a local unit and report to the Governor whether a financial emergency exists.
- If, after statutory due process has been accorded to local officials, the Governor confirms the existence of a financial emergency, the local governing body must select one of four statutory options to address the financial emergency: a consent agreement, an emergency manager, neutral evaluation, or Chapter 9 bankruptcy.
- Act 436 is the only Michigan statute that authorizes municipalities in this State (albeit with State approval) to proceed under federal bankruptcy laws.
- PA 436 replaces PA 72 of 1990, the Local Government Fiscal Responsibility Act
- Public Act 34 of 2001, the Revised Municipal Finance Act
- Requires units of local government to apply annually for qualified status from the Department of Treasury in order to issue municipal securities.
- Units of local government that receive qualified status may then issue municipal securities throughout the course of that year without further approval from the Department of Treasury, subject to certain post-issuance reporting requirements.
- Units of local government that do not receive qualified status must receive prior approval from the Department of Treasury for each proposed debt issuance.
- Authorizes the issuance of tax-anticipation notes and revenue-anticipation notes.
- Public Act 279 of 1909, the Home Rule City Act (Section 36a only)
- Authorizes a city in which a financial emergency has been declared under the Local Government Fiscal Responsibility Act to issue financial recovery bonds.
- Such bonds may be issued in an amount not to exceed 20 percent of the assessed valuation of the city notwithstanding that cities otherwise are limited to ten percent of assessed valuation for debt issuance purposes.
- Financial recovery bonds are subject to such terms and conditions as approved by the Local Emergency Financial Assistance Loan Board.