Michigan voters were asked if they wanted to keep the state's 2011 emergency manager law, aimed at helping school districts and cities avoid financial meltdown. They said no.
In a narrow vote, Public Act 4 was repealed in a statewide referendum on Tuesday.
The law gave broader powers to the state-appointed emergency manager, allowing that person to come into financially troubled school districts and cities and take over the books. It allowed the emergency manager to make decisions about employees and scrap union contracts.
Muskegon Heights Public Schools, which was facing a $12 million deficit, was one of the first districts to get one. The emergency manager transitioned the district into a charter school.
Benton Harbor, a city facing bankruptcy, also received its own financial leader. The idea was met with backlash. Too much government power, said critics.
While opponents of the legislation cheer on the repeal, the decision comes as a setback to Gov. Rick Snyder, who says the tool was helping struggling districts and cities.
"What I would say is I'm disappointed because it does make life more complicated because I believe Public Act 4 was a good law and it was working well," said Gov. Snyder on Wednesday.
He wants to meet with state lawmakers to talk about the possibility of passing replacement legislation that would incorporate some aspects of the law, like the early warning system, which encourages districts and cities to report on their finances, so they're not coming for help at the final hour when it may be too late.
Snyder said it's too early to say what will be done. He does worry that no emergency manager law on the books could mean more bankruptcy in the state of Michigan.
"In terms of not having a manager who can do their work more effectively and faster, you run into a case where the probability potentially municipal bankruptcies could increase because that might be the only option left to them," said Gov. Snyder.
It's unclear what the impact of the repeal will have immediately. Part of the confusion is what rules remain on the books. Leading up to the election, Public Act 4 was suspended and replaced with the older weaker version from 1990 called Public Act 72 that was put into place by Former Governor Jennifer Granholm.