HB-5567, As Passed House, May 22, 2014

SUBSTITUTE FOR

HOUSE BILL NO. 5567

A bill to amend 1909 PA 279, entitled

"The home rule city act,"

(MCL 117.1 to 117.38) by adding sections 4s and 4t.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 4s. (1) Notwithstanding a charter provision or ordinance

to the contrary, a city with a population of more than 600,000

shall establish the position of chief financial officer. The mayor

of the city shall appoint the chief financial officer subject to

the approval of the governing body of the city, and, if applicable,

the financial review commission created in the Michigan financial

review commission act. The chief financial officer shall have

substantial experience with sophisticated municipal financial

transactions, complex multidimensional governmental restructurings,

governmental labor relations, health care benefits or pension

matters, and local government management with governmental units

having aggregate revenues of $250,000,000.00 or more. Nothing in

this section shall be construed to prevent a city with a population

of more than 600,000 from adopting a charter provision or ordinance

providing the responsibilities for a chief financial officer that

are not inconsistent with this section.

(2) The chief financial officer appointed under subsection (1)

shall report to the mayor and do all of the following:

(a) Supervise all financial and budget activities of the city.

(b) Coordinate the city's activities relating to budgets,

financial plans, financial management, financial reporting,

financial analysis, and compliance with the budget and financial

plan of the city. If applicable, the functions and responsibilities

of the chief financial officer shall be subject to approval by the

financial review commission created in the Michigan financial

review commission act.

uniform budgeting and accounting act, 1968 PA 2, MCL 141.421 to

141.440a, and, if applicable, submit that certification to the

financial review commission created in the Michigan financial

review commission act.

(d) Submit in writing to the mayor and the governing body of

the city his or her opinion on the effect that policy or budgetary

decisions made by the mayor or the governing body of the city will

have on the city's annual budget and its 4-year financial plan

described in section 4t.

(3) The local elected and appointed officials and employees of

the city shall promptly and fully provide financial information

requested by the chief financial officer.

Sec. 4t. (1) Notwithstanding a charter provision or ordinance

to the contrary, for a city with a population of more than 600,000,

all of the following apply:

(a) The city and its officers, employees, agents, and

contractors shall comply with the Michigan financial review

commission act, if applicable.

(b) For each fiscal year beginning after the effective date of

the amendatory act that added this section, the city shall adopt a

financial plan covering that fiscal year and the next 3 fiscal

years. If a 2-year budget is in effect for the city under section

21 of the local financial stability and choice act, 2012 PA 436,

MCL 141.1561, the financial plan must be consistent with the 2-year

budget. The financial plan shall be proposed by the mayor and

approved by the governing body of the city. If applicable, a

financial plan must be approved by the financial review commission

created in the Michigan financial review commission act before it

takes effect. A financial plan shall include, but not be limited

to, all of the following information for each of the 4 fiscal years

covered by the financial plan:

(i) A projection of all revenues and expenditures of the city

for each fiscal year, including debt service.

(ii) A projection of cash flow for each fiscal year.

(iii) A schedule of projected capital commitments for each

fiscal year.

(iv) Measures to assure that projected employment levels,

collective bargaining agreements, and other employee costs are

consistent with projected expenditures and available revenue.

(v) Measures to assure compliance with mandates under state

and federal law consistent with projected expenditures and

available revenue.

(vi) Measures to assure adequate reserves for mandated and

other essential programs and activities in the event of an

overestimation of revenue, an underestimation of expenditures, or

both.

(vii) A statement of significant assumptions and methods of

estimation used for projections included in the financial plan.

(viii) Any other information the mayor, governing body, or chief

financial officer of the city considers appropriate.

comply with all of the following requirements:

(i) Projected revenues and expenditures for each fiscal year

covered by the financial plan shall result in a balanced budget

according to generally accepted accounting principles, including

compliance with the uniform budgeting and accounting act, 1968 PA

2, MCL 141.421 to 141.440a.

(ii) Include contributions necessary to assure that pension

systems for employees and retirees of the city are adequately

funded.

(iii) Provide for the issuance of or incurring of debt by the

city only in compliance with the revised municipal finance act,

2001 PA 34, MCL 141.2101 to 141.2821, and the Michigan financial

review commission act, if applicable.

(iv) Provide for the payment in full of debt service on all

debt issued or incurred by or on behalf of the city.

(v) Provide for operations of the city to be conducted with

projected cash resources based upon projected cash flow for each

fiscal year.

(vi) Include a general reserve fund for each fiscal year to

cover potential reductions in projected revenues or increases in

projected expenditures equal to not less than 5% of the projected

expenditures for the fiscal year.

(vii) For each fiscal year, provide for the elimination of any

deficit incurred in the prior fiscal year according to generally

accepted accounting principles.

(viii) Rely upon revenue and expenditure projections based upon

reasonable and appropriate assumptions and methods of estimation.

(ix) Rely upon cash flow projections based upon reasonable and

appropriate assumptions as to sources and uses of cash, including

timing.

(d) The city shall hold a revenue estimating conference in the

second week of September and in the third week of February of each

year. A revenue estimating conference shall be subject to all of

the following:

(i) The principals of a conference shall be the chief financial

officer of the city, the state treasurer or his or her designee

from within the department of treasury, and a person affiliated

with another public entity, including a state institution of higher

education, with experience in economic forecasting and revenue

projection selected by the chief financial officer of the city and

the state treasurer.

(ii) A conference shall establish an official economic forecast

of major variables of the national, state, and local economies. A

conference also shall establish a forecast of anticipated revenues

of the city as the conference determines.

(iii) The official forecast of economic and revenue variables of

the conference shall be determined by consensus among the

conference principals and shall be for the fiscal year in which the

conference is being held and the succeeding 2 fiscal years. The

conference also shall forecast general fund revenue trendline

projections for the city for an additional 2 fiscal years.

Conference forecasts of revenues and expenditures shall be based

upon the assumption that current law and administrative procedures

will remain in effect for the forecast period.

(iv) The conference may request and shall receive from

officers, departments, agencies, and authorities of the city the

assistance and data needed to enable the conference to fulfill its

duties.

(v) The principals of the conference shall determine

procedures to be used by the conference including procedures for

conference sessions and presentations by persons, except that any

final action establishing an official forecast shall require the

unanimous support of all principals. A conference shall complete

its work within a period of not more than 5 days unless extended by

consensus of the principals.

(vi) Meetings of a conference are subject to the open meetings

act, 1976 PA 267, MCL 15.261 to 15.275.

(vii) A principal shall preside over conference sessions,

convene conference sessions, and specify topics to be included on

the conference agenda. The responsibility of presiding over

sessions of the conference shall be rotated annually among the

principals, with the initial chairperson being elected by the

principals. The chairperson presiding over a conference is

responsible for setting the conference date and preparing and

distributing the necessary documents before the conference,

including comparisons between alternative information where a

comparison is warranted. Upon the written request of a principal, a

conference shall be convened by the chairperson.

(viii) A writing prepared, owned, used, in the possession of, or

retained by the conference in the performance of an official

function is subject to the freedom of information act, 1976 PA 442,

MCL 15.231 to 15.246.

(ix) A conference shall distribute its economic and revenue

forecasts to the mayor of the city, the governing body of the city,

and, if subject to the Michigan financial review commission act,

the financial review commission. The city shall publish the

forecasts on its website.

(x) If the city is subject to the Michigan financial review

commission act, the city may be required to amend its revenue

estimates pursuant to an order or directive of the financial review

commission created in the Michigan financial review commission act.

(e) The mayor of the city may veto a line item appropriating

money in an appropriations ordinance. The portion of the

appropriation approved is effective. The item disapproved is void

unless reauthorized according to the procedures prescribed in

House Bill No. 5567 (H-2) as amended May 22, 2014

charter or law for the adoption of ordinances over a veto.

(f) If, during a fiscal year, expenditures for the city exceed

revenues, the mayor may, subject to the approval of the governing

body of the city, authorize by executive order the reduction of

line-item expenditures during that fiscal year.

(g) Beginning on the effective date of the amendatory act that

added this subdivision, the city shall post on its website copies

of both of the following:

(i) [Within 30 days of the contract award, each contract] entered

into by the city during each fiscal

year.

(ii) All contracts in which the city is a party that are in

effect during each fiscal year.

(2) For the fiscal year ending September 30, 2015, $100,000.00

is appropriated from the general fund/general purpose to the

department of treasury to administer the provisions of this section

and section 4s.