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The Review Blue Arrows

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There’s not a lot of good news coming out of Lansing these days. I imagine we’re all tired of hearing it, but the truth remains that the state budget situation is bleak for the upcoming fiscal year and bleaker still for 2011. What does this mean for our local units of government? It’s going to be a struggle.

Perhaps it is the “glass half-full” mentality, but there is something positive in these budget numbers. For the first time ever, there is a real shot at substantive government reforms in Lansing. At the top of that list is reforming PA 312 of 1969 and PA 7 of 1967, the Urban Cooperation Act.

Act 312: Binding Arbitration

With cuts to revenue sharing and property tax revenues declining, many state legislators are looking at reforming PA 312 in order to help municipalities. "Knowing revenue sharing isn't being increased, we need to look at ways to help local communities and leaders stretch limited funds," stated Senator Mark Jansen (R-Gaines Township), a member of the Senate Appropriations Committee and a leading proponent of government reforms.

PA 312 requires binding arbitration for labor disputes between a public safety union and a local unit of government. This summer the Legislature held several work groups led by Senator Jansen and Representatives Doug Geiss (D-Taylor) and Joe Haveman (R-Holland) in hopes of reaching some sort of compromise between local units of government and the public safety unions on PA 312 reform.

Ability to Pay

From a local government management standpoint, it is important to define “ability to pay” and to include internal comparables in the law. Currently, the Act references a community’s “ability to pay,” but there is no definition. This has led to disparity in arbitration decisions, allowing arbitrators to decide independently what “ability to pay” means. Defining “ability to pay” would give arbitrators a structure in which to work, and create more consistent and cost-effective decisions. “PA 312 reform is crucial to municipalities being able to depend on their budget process and control their own costs,” emphasizes Rep. Geiss.

Internal Comparables

Under current law, there is no requirement for an arbitrator to consider what wage increases and benefits packages a local unit of government is able to offer its other employees. The arbitrator should have to consider the wage increases and benefit packages of other union employees within the local unit of government in the arbitration decision.

Amending the statute to define the “ability to pay” and to require arbitrators to consider internal comparables are crucial to allowing communities to be vibrant, healthy places to live, work and visit. “We can’t be satisfied with only having well-paid public safety officers. We need healthy communities with good streets to drive home on, parks where our kids can play, and downtowns people want to visit. We need all of these things in addition to well-paid officers,” states Rep. Haveman.

Act 7: Roadblock to Cost Savings

Another key reform to local government cost savings is amending PA 7 of 1967, the Urban Cooperation Act. This Act enables a public agency to jointly exercise with another public agency, any power, privilege, or authority that each is able to exercise on its own. For instance, under Act 7, a local unit can create an authority for public safety, parks and recreation or any other type of authority with another local unit (or multiple local units). However, the current language in Act 7 is a disincentive to this type of consolidation of services—it says that no employee may be harmed when combining departments. So, if one community pays its officers $40,000 a year, and another pays $50,000, the practical reality is that all officers would be bumped up to $50,000 instead of perhaps meeting in the middle at $45,000. As a result, all employees would have to go to the highest level of salary and benefits; there is no real savings, and no incentive, to create an authority. This also prevents a true collective bargaining process until the longest remaining contract expires.
Rep. Paul Opsommer (R-DeWitt) has been a leading proponent of reforming the Urban Cooperation Act the last two sessions of the Legislature. As a former mayor of the city of DeWitt, he knows first hand the roadblock created by the Act’s current language. “State government has to get out of the way or stop preventing local governments from working together,” stresses Representative Opsommer. “We can’t in essence shoot locals twice. We can’t cut revenue sharing and not give our local officials the tools to work together.”

Removing “Highest Level of Pay” Requirement

Legislation was introduced into the House last session to remove the “highest level of pay” language and allow local officials to negotiate with employees in a way that results in governmental consolidations, efficiencies and real cost savings for Michigan residents. Unfortunately, the bills got so watered down in the House that they essentially do nothing; then they were passed over to the Senate. The Senate re-strengthened the bills and considered them, but they were defeated when the firefighters convinced the Democrats and two Republicans that they were bad for employees.

PA 312 and the Urban Cooperation Act are two entirely separate, but important, reform ideas. Last session the firefighters were successful in linking the two together in the eyes of the Legislature, indicating that if a fire authority is not covered under PA 312, then creating authorities would be bad for firefighters. Creating authorities is a way for local units of government to cut costs and create more efficient workforces. Amending the Urban Cooperation Act is key to giving communities the freedom to consolidate departments in a way that makes sense for them.

The Legislature has many difficult decisions to make in the coming months. Michigan has a number of long-term structural reforms that are necessary to make our state competitive in the new economy. PA 312 and the Urban Cooperation Act reforms are vital to the long-term viability of Michigan’s communities.

Visit the League’s PA 312 Website

For 40 years, PA 312 has been damaging Michigan’s local units of government. Visit our PA 312 website ( for current information, news articles, and resources, or to share your PA 312 horror story. The only way legislators are going to know how bad PA 312 is for Michigan communities is if we tell them. Each example brings us one step closer to reform.

Video: Educating Lawmakers on PA 312 and Corporation Barriers

Lawmakers join the League and local officials in discussing mandatory binding arbitration and consolidation laws. Video features Grand Rapids Deputy City Manager Eric DeLong, Taylor Mayor Cameron Priebe, and Wyoming City Manager Curtis Holt.

Related Articles

• Budget Woes Lead to Talk of Eliminating Full-Time Fire Department (The Grand Rapids Press, 8/18/09)

• How Localities Can Avoid Police and Firefighter Layoffs (Detroit Free Press, 8/16/09)

• Old Law Ensures Less Bang for Taxpayers’ Buck (Center for Michigan, 5/14/09)

• PA 312 Leads to Cuts in Public Safety (The Ann Arbor News, 5/12/09)

• Editorial: State Must Take Cue to Cut Spending (Crain's Detroit Business, 3/29/09)

• Costly Move Expanding Arbitration (Grand Rapids Press, 6/22/08)

• Pontiac Struggles with Depleted Police Force (Oakland Press, 5/21/08)

• Editorial: Mayors, Not Judges, Should Run Our Cities—Supreme Court Should Allow Detroit, Pontiac to Proceed with Layoffs (Detroit Free Press, 11/26/07)

• In Our Opinion: Negotiate Government Reforms (Detroit Free Press, 9/19/07)

• State Officials Look at Changing Arbitration Laws (Crain's Detroit Business, 6/18/07)

• Editorial: Repeal Laws Favoring Unions Over Taxpayers (Detroit News, 6/13/07)

Related Publications

• PA 312 Talking Points (The Michigan Municipal League)

• PA 312 Briefing Document

• A Conversation with the Governor (Live on WWJ News Radio 950)

• The Public Employment Relations Act: Conflicts & Possible Alternatives (Citizen's Research Council of Michigan)

• Final Report to the Governor—2006 (The Task Force on Local Government Services and Fiscal Stability)

Samantha Harkins is a legislative associate for the League. You may reach her at 517-908-0306 or



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