Senior Economist David Littmann writes in today's CapCon:

In retaliation for authorizing these expanded emergency manager powers, unions have organized a statewide referendum to abolish the new law. If they can gather 161,000 valid petition signatures, this will freeze further emergency manager work until November’s statewide general election. Reportedly they are close.

If the unions get the signatures but state voters reject their position in November, then emergency manager work will proceed. However, if the unions win, Gov. Snyder will have to decide whether to toss Detroit into federal bankruptcy court.

The irony, of course, is that Chapter 9 bankruptcy is considered by many to be “emergency manager on steroids.” In full-fledged bankruptcy, the city’s lenders get a “haircut,” fire and police personnel revert to ordinary “at will” employee status like non-unionized office workers, and retiree health care and pension payments can vaporize.

There would be other side effects to bankruptcy. Several years ago, when DPS and other metro communities were already struggling, the mere mention of a potential Detroit bankruptcy filing caused an upheaval in borrowing costs and credit agency evaluations. Borrowing rates for Detroit Public Schools rose to 9 percent (a tax-exempt rate, no less). Even excellent credit risks like Oakland County were tainted with negative outlooks, based more on uncertainty related to spillover from Michigan’s largest city than the flailing "Big Three" automakers.

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