2012 House Bill 5566 / Public Act 284

Increase school and local“deficit spending” debt

Introduced in the House

April 24, 2012

Introduced by Rep. Cindy Denby (R-47)

To greatly increase the level of borrowing from the state that school districts and local governments can use to cover “deficit spending” that exceeds their current revenues. Specifically, under House Bills 5566 to 5570, a $5 million annual cap on this state lending would increase to $100 million each year through 2018, and the maximum amount per loan would increase from $3 million to $20 million.

Referred to the Committee on Local, Intergovernmental, and Regional Affairs

May 30, 2012

Reported without amendment

With the recommendation that the substitute (H-2) be adopted and that the bill then pass.

June 7, 2012

Substitute offered

The substitute passed by voice vote

Amendment offered by Rep. Woodrow Stanley (D-34)

To limit the application of some of the proposed requirements and restrictions to Detroit and the Detroit school district.

The amendment passed by voice vote

Amendment offered by Rep. Tom McMillin (R-45)

To prohibit pay raises for employees of a city or school district that is given a deficit spending loan authorized by the bill until the loan is repaid.

The amendment failed by voice vote

Amendment offered by Rep. Tom McMillin (R-45)

To require a city that is given a deficit spending loan authorized by the bill to comply with the 2011 law that required higher employee health insurance contributions. That bill allowed cities (but not schools) to opt-out of its provisions.

The amendment passed by voice vote

Amendment offered by Rep. Cindy Denby (R-47)

To revise details of loans to a school district from advances from the state school aid fund.

The amendment passed by voice vote

Amendment offered by Rep. Earl Poleski (R-64)

To require that interest on loans authorized by the bill be no less than the average rate on 10 year municipal bonds, and allow higher rates.

The amendment passed by voice vote

Amendment offered by Rep. Al Pscholka (R-79)

To allow the state to raise the rates or accellerate the required repayment period of a loan if the municipality or school district is not in compliance with deficit reduction plans required by the bill.

The amendment passed by voice vote

Passed in the House 73 to 34 (details)

Received in the Senate

June 12, 2012

Referred to the Committee on Appropriations

July 18, 2012

Reported without amendment

With the recommendation that the substitute (S-5) be adopted and that the bill then pass.

Substitute offered

To replace the previous version of the bill with one that increases the amount of deficit spending loans by a slightly lesser amount.

The substitute passed by voice vote

Passed in the Senate 27 to 10 (details)

To greatly increase the level of borrowing from the state that school districts and local governments can use to cover “deficit spending” that exceeds their current revenues. Specifically, under House Bills 5566 to 5570, a $5 million annual cap on this state lending would increase to $85 million each year through 2018, and the maximum amount per loan would increase from $3 million to $20 million. Short term, this would primarily authorize state money for the Benton Harbor, Muskegon Heights, Highland Park and Pontiac school districts.

Motion by Sen. Tupac Hunter (D-5)

To give the bill immediate effect.

The motion passed 28 to 8 (details)

Received in the House

July 18, 2012

Passed in the House 81 to 22 (details)

To concur with the Senate-passed version of the bill, which authorizes slightly less new state debt.

Signed by Gov. Rick Snyder

Aug. 1, 2012