HOUSE BILL NO. 6296
A bill to require a fiscal review system to identify local governments that are exhibiting fiscal or operational stress; to identify local governments in a potential fiscal emergency; to provide for the powers and duties of certain state and local governmental officers and entities; to create community engagement advisory committees and prescribe their powers and duties; and to create a fund to provide technical assistance to certain local governments.
the people of the state of michigan enact:
Sec. 1. This act may be cited as the "fiscal review and assistance to local governments act".
(a) "Advanced qualified technical assistance" means any of the technical assistance described in section 19(4) that is provided to a local government under the final determination of the state treasurer in section 13.
(b) "Chief administrative officer" means any of the following:
(i) The elected county executive or appointed county manager of a county; or, if the county has not adopted an optional unified form of county government, the controller of the county appointed under section 13b of 1851 PA 156, MCL 46.13b; or, if the county has not appointed a controller, an individual designated by the county board of commissioners of the county.
(ii) The city manager of a city or, if a city does not employ a city manager, the mayor of the city.
(iii) The manager of a township or, if the township does not employ a manager, the supervisor of the township.
(iv) The manager of a village or, if a village does not employ a manager, the president of the village.
(c) "Committee" means a community engagement advisory committee created in section 17.
(d) "Department" means the department of treasury.
(e) "Financial improvement agreement" means an agreement between the state treasurer and a local government determined to be in need of advanced qualified technical assistance to assist the local government in addressing the fiscal and operational factors identified by the fiscal review system for that local government.
(f) "Financial recovery agreement" means an agreement created by the community engagement advisory committee for a local government determined to be in a potential fiscal emergency.
(g) "Fund" means the local government technical assistance fund created in section 19.
(h) "Local action statement" means a statement prepared by a local government that has been determined to be in need of qualified technical assistance that addresses the fiscal and operational factors identified by the fiscal review system for that local government.
(i) "Local government" means a county, city, village, or township.
(j) "Qualified technical assistance" means any of the technical assistance described in section 19(4) that is provided to a local government under the final determination of the state treasurer in section 11.
Sec. 5. The department shall develop a fiscal status dashboard that is publicly available and includes both of the following:
(a) A summary of each local government's fiscal condition.
(b) All relevant fiscal and operational factors from the fiscal review system created under section 9 for each local government.
Sec. 7. The department shall, not less than every 3 years, generate a report on the overall fiscal health of local governments in this state. The report must include, but not be limited to, the identification of trends, risks, and ongoing challenges local governments have in delivering critical public services. The report must be posted on the department's website and be provided in writing to the governor, the secretary of the senate, and the clerk of the house of representatives.
Sec. 9. The department shall develop a fiscal review system that identifies local governments that are exhibiting fiscal or operational stress. Not later than December 31, 2023, the department shall provide guidance for the fiscal review system and shall update the review criteria for the fiscal review system not later than December 31 of each year in which a report is generated under section 7. The fiscal review system must consist of all of the following factors:
(a) A fiscal model that provides a statistical review of each local government by unit type based upon all of the following indicators:
(i) Cash solvency, which means general fund cash and investments as a ratio of total general fund liabilities.
(ii) Budget solvency, which means assigned, unassigned, and committed fund balances as a ratio of general fund revenues.
(iii) Long-term solvency, which means net position as a ratio of governmental revenues.
(iv) Service solvency, which means taxable value as a ratio of population.
(b) An operational model that reviews each local government for compliance with all of the following:
(i) Having an approved deficit elimination plan if a deficit elimination plan is required under section 21 of the Glenn Steil state revenue sharing act of 1971, 1971 PA 140, MCL 141.921.
(ii) Submitting audits or annual financial reports that are required by law that are not delinquent for 2 or more consecutive reporting periods.
(iii) The provisions of the protecting local government retirement and benefits act, 2017 PA 202, MCL 38.2801 to 38.2812.
(iv) Submitting an audit to the department that does not include a disclaimed or adverse opinion.
(v) Adopting a budget in accordance with the uniform budgeting and accounting act, 1968 PA 2, MCL 141