Republican Justice Mary Beth Kelly was the crucial vote, joining three Democratic justices.
The decision Friday means voters will decide whether to keep or kill a law that sends powerful emergency managers into distressed communities and school districts to fix their finances.
The Stand Up for Democracy coalition submitted over 200,000 valid signatures to put the issue on the ballot. Citizens for Fiscal Responsibility claimed the font size on the petitions was too small.
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State canvassers deadlocked and Michigan's Appeals Court allowed the signatures, prompting the appeal to the state's high court.
It heard arguments in July about the issue.
Al Garrett, of the American Federation of State and Municipal Employees, was behind the campaign.
"I'm ecstatic. I think it says the people get to speak their mind with regard to this most egregious law that ever passed, as far as I'm concerned," Garrett said.
As it stands 95 days before the election, Gov. Rick Snyder is in the lead on this issue. Public Policy Polling, of North Carolina, did a poll of Michigan voters two weeks ago. The results from that poll show the Yes side with 41 percent and the No side with 31 percent. It also shows a large undecided group left to capture.
"And so I think once they get the true contrast between the theory that the governor has and the reality in terms of the product, I think the citizens will line up with this," said Garrett.
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