Michigan is on the verge of passing legislation that would grant some new powers to Emergency Financial Managers or EFMs. These managers are basically people appointed by the state when a state, city or school district finds itself in dire straights. From what I’ve been ready among some on the Left, including E.D. Kain and Rick Ungar, this is the end of democracy as we know it in the Wolverine State.
Since I’m a Michigan native and my hometown of Flint fell under state control in 2002, I decided to read up on what’s going on. Jack Lessenberry of Michigan Radio lays out what’s going on:
Nobody in Lansing was neutral yesterday when the Michigan senate completed passage of new, tougher Emergency Financial Manager legislation on a straight, party line vote.
State Senator Phil Pavlov said this is needed to maintain “vital services, such as public safety and education,” when a city or a school district is in desperate financial straits.
This reform, he said, is necessary to allow steps to be taken “to protect public interests and the public’s money and strengthen local control and accountability.” His fellow Republicans all agreed.
But if you talked to any of the Democrats, they sounded like this was the equivalent of Mussolini seizing power. “An unfair and unjustified power grab,“ Senate Minority Leader Gretchen Whitmer called it. One of her colleagues said it went way too far, “and was going to damage our communities and our schools.”
It’s also frustratingly clear that in the past, some emergency managers in places like Pontiac and Hamtramck could have used more authority. Robert Bobb needed to be able to tackle academic reform in the Detroit district; the courts said he couldn’t.
Now, his successor will have that power. Democrats are mainly afraid of provisions in the bill that would allow emergency managers to void contracts and ignore collective bargaining agreements if necessary. EFMs can even dissolve a municipal government.
Democrats rightly fear this could be the death knell for public employee unions in such cases. To be sure, the majority Republicans seemed uninterested in even attempting to compromise or win over Democrats. However, here’s something we might ask the indignant minority party: Where have you been for the last several years?
What’s clear is that a lot more school districts and municipalities are likely to have to endure emergency financial managers, or EFMs for short.
This has been clear to everyone for some time, and it has also been clear that the old law was inadequate. Did the Democrats propose changes last year, when they controlled the governorship and the state house? Did they suggest conducting a review of Detroit’s troubled finances?
They did not, clearly for political reasons. They did nothing, any more than they attempted to address the state’s deep-seated financial problems. Now, the balance of power has shifted.
Crain’s Detroit has a good overview of the law. There is a current law on the books that has been used in the past. As I said earlier, it was used on City of Flint in 2002. The Crain’s article sums it up:
Here’s how the existing law works: A review of a city or school district’s finances is triggered when one of several events happens, like payless paydays or a failure to meet pension obligations. The state treasurer puts a review panel in place to evaluate the local government’s fiscal health, and if there’s a financial emergency, an emergency manager is appointed.
This is what happened in Flint. A New York Times article from 2002 explains that the state came in and in effect, stripped elected officials of their power:
Even in a city used to hard knocks, this has been a bruising year.
In March, Mayor Woodrow Stanley was recalled by voters frustrated with the city’s deteriorating finances, and racial tensions simmered as the Rev. Al Sharpton came to rally support for the mayor, who is black.
In May, unemployment rose to 8.3 percent, far higher than even beleaguered Detroit to the southeast.
Since then, Flint’s municipal debt has climbed to nearly $40 million, alarming state officials, who began a review of the city’s finances in the spring. Gov. John Engler, a Republican, said the city had no credible plan to turn itself around. Darnell Earley, the city administrator who became acting mayor when Mr. Stanley was recalled, went so far as cutting public ambulance service to try to bring the city’s finances under control.
The denouement came on Monday when the state took control of the city’s government, stripping elected officials of much of their power. Flint, a city of 125,000, is the largest municipality that has ever been run by the state.
So, what does the new law do? Back to the Crain’s article:
Amendments to state law under discussion include expanding the list of events that can trigger the state review that leads to installation of an emergency manager, changing the powers of local elected officials during the emergency financial manager’s tenure, giving an emergency manager the power to modify or terminate labor contracts, allowing an emergency manager to consolidate or eliminate departments and allowing a current or recent elected official to serve as emergency manager.• Under the existing law, an emergency manager can renegotiate union contracts but not break them. The amendment would place some restrictions on the emergency manager’s ability to break contracts, namely, to prove it’s necessary, based on the financial emergency and the good of the public. Contract modifications would be temporary.
The article goes on to say that some policy experts wonder if the proposed law could run afoul of the state constitution, though the State Treasurer says that it can be backed up with a competing provision.
This blog post does a good job of looking at the current law as well as the new law. It does have its own spin, but it’s still informative.
My own take on this is that from what I’ve read, the proposed new law could do things like break union agreements or even dissolve government entities, but that it doesn’t say it would do that. I also think that what is lost in some of the talk of power grab is that some Michigan cities have been prennial problems in the state. Flint is in danger of going back to state control only ten years after going through it again. Andrew Heller, a columnist for the Flint Journal notes that my hometown is acting like the cartoon character Wimpy from Popeye, saying it would pay someday for some money today:
Imagine you have a brother who is a, well, we won’t call him a deadbeat because he’s family, but he does have a nasty habit of spending money he doesn’t have.
In fact, a few years ago – much to everyone’s embarrassment – he ran up so many bills around town that the sheriff threw him in the clink and had a judge appoint someone to run his finances for him.
The idea was, “If we show him how it’s done, he’ll become smarter about how he spends his money and then he will no longer run up bills that he can’t pay.”
Except it didn’t work. The court-appointed money manager paid off your brother’s staggering bills and got him back on the financial straight and narrow. In fact, the turnaround in his finances was remarkable.
“Surely, he has learned some valuable lessons and will be able to run his own finances from here on out in a responsible, adult fashion,” you thought.
But the second the money manager left town, your brother went right back to his spendthrift ways.
“I can’t help it,” he cried. “I’ve always spent money like it was going out of style and I guess I can’t stop.”
So he didn’t even try. He kept right on spending money hand over fist on things he didn’t need and luxuries he couldn’t afford, and before long he had IOUs floating all over town.
That was when he came to you.
“Brother,” he said. “I’ve proven once again that I have all of the self-discipline and impulse control of a sailor on shore leave. But I’ve changed this time, I swear it. And if you can see your way clear to give me permission to borrow $20 million, I promise I will pay the money back later on with interest.”
Would you trust him?
Now, I totally understand what cities like Flint have gone through in the last 30 years or so. But I also think that after a while a city that has been on hard times has to get itself cleaned up- it can’t just think that it can go to Lansing anytime cash runs short.
It’s hard to see my home state struggle like this. But I also know that Michigan has been living in a state of denial for decades that somehow, someway the good ol’ days will come back. There are people in my homestate who still think that King Auto will come back and the state will be rolling in the dough once more. We don’t want to think that hard decisions have to be made, and there has to be a willingness to move forward towards new industries and ideas.
Maybe, the EFM bill goes to far, I don’t know. But then, I’d like to think that a city that’s had to go through the embarassment of having a state-appointed manager try to get you back under control would be enough to scare said city straight.
I’d like to see what those who are talking about the end of democracy in Michigan would do when there are cities that are financial basketcases.