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The Fate of Emergency Managers in Voters’ Hands

By Yanjie Wang

Special to the Michigan Citizen from Capital News Service

LANSING — Michigan voters are waiting to decide the fate of Public Act 4 (PA4), known as the “Emergency Manager Law.”

Among six ballot proposals in November, proposal 12-1 will ask voters to vote “yes” approving the emergency manager law or vote “no” to repeal the law.

Public Act 4 establishes criteria to assess the financial condition of local government units, including school districts; authorizes the governor to appoint an emergency manager upon finding of a financial emergency and allows the emergency manager to act in place of local government officials; requires emergency managers to develop financial and operating plans, which may include modification or termination of contracts, reorganization of government and determination of expenditures, services and use of assets until the emergency is resolved; authorizes state-appointed review team to enter into a local government approved consent decree.

PA4 became law in 2011 as the replacement of the Public Act 72 (PA72) of 1990, known as the Emergency Financial Manager Law.

Although PA4 would have greater ability to make changes in community compared to PA72, Michigan State University Professor Mark Skidmore, specializing in public economics and urban economic, said local units would have less ability to make decision.

Rep. Rashida H. Tlaib, D-Detroit, agrees that PA4 may have good intentions, but it completely denigrates the quality of services in her district and costs more in debt.

“People can’t find anybody for help. City Council doesn’t have any power to do anything because of the emergency manager law,” she said. The city of Detroit recently entered into a Consent Agreement with the state to stave off the appointment of an emergency manager.

Local governmental units such as city council and school districts are worried that such expansive authority takes away any power that a local government could use to manage its community.

“When you take away democracy by taking away elected authority, it is a dictatorship,” Scott Kincaid, Flint City Council president, said.

Since Gov. Snyder appointed Michael Brown as the Emergency Manager of Flint in 2011. Ordinances he has issued include elimination and restoration of salaries for mayor and council, elimination of offices such as Civil Service Commission and city ombudsman and determination of retiree insurance for public officers, according to the records on the city of Flint emergency manager webpage.

LaMar Lemmons, president of the Detroit Board of Education, is also concerned about the Detroit Public Schools’ emergency manager’s power.

“Under the old law, the emergency manager had to release a report to the elected board of what he is doing. In the old law, he is only in charge of the finances and not the entire district,” Lemmons said. The EFM could not break contracts that were in place unless there were detrimental.

Both Kincaid and Lemmons saw little improvement to the financial crisis in their districts.

Lemmons said under the emergency manager, DPS has accrued additional hundreds of millions of dollars of debt.

“We’ve got the emergency manager who has been selling all the assets and has been making contracts with his friends and family with no apparent ratification of natural emergency,” said Lemmons. “He has become comfortable and doesn’t have a plan.”

The city of Flint also saw the deficit doubled during the time the emergency manager has been there, according to Kincaid.

Skidmore, said emergency managers under PA4 do have more control in decision-making to resolve long-term challenges, compared to the emergency financial managers who may only be able to address immediate problems because of limited powers.

For a community with financial pressure to pay for pensions and retiree health care, a long term chronic challenge would exist when “an increasing part of the general fund revenues go out to pay for benefits,” Skidmore said, “that means it is not going to pay for current services.”

Rep. Al Pscholka, R-Stevensville, sponsor of the bill, said PA4 was intended to help prevent municipalities from bankruptcy and protect taxpayers. An early warning system enabled by PA4 would help communities take action before it loses its financial solvency.

On his blog, Gov. Rick Synder applauded the early warning system, saying it would help a community to avoid the need for an emergency manager. He also acknowledged the expansive power that emergency managers would be given.

“When we have an emergency (financial) manager, they didn’t have enough powers, so in many cases they could be there for a very long time. So, we strengthened the power the emergency (financial) manager would have so that they can come in, do their work, finish their work and get out, and get the community back in charge,” Snyder said.

Contrary to Snyder’s perception that more power could enable emergency managers to do their jobs and leave the community in a timely manner, Kincaid thought the position would increase job security for him and officers he hired so that with being appointed by the governor, “as long as there is a deficit, he can stay.”

Public Act 4 is currently suspended as the Supreme Court ordered a referendum on the law. At the same time, the old version of emergency manager law, PA72, is in effect.

Gov. Snyder’s office has confirmed that if people vote “yes” on the ballot, PA 4 will be revived, while if people vote “no,” the state goes back to the PA 72 automatically.

However, Flint City Council is filing a lawsuit to prevent the PA72 from being revived.

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