detroit

Last Wednesday, Michigan’s Senate passed a bill that would allow the state treasurer to appoint emergency financial managers to municipalities and school districts that are in danger of failing. The bill was passed with a 26-12 vote and would permit them to fire local officials, dissolve union contracts, seize and sell assets, and eliminate services such as police and fire departments. The bill is now being handed over to a conference committee which will reconcile differences with the one passed by the House in February and then is expected to be signed by Gov. Rick Snyder.

While the debate for this bill has been linked in the media to Wisconsin’s fight to keep union collective bargaining rights, the real issue here is the fact that Michigan can appoint these managers who, while able to undermine the role of unions, are not elected and can wield powers normally given to elected officials, effectively nullifying their role.

WHO ARE THESE PEOPLE?

The emergency manager must have at least five years experience. They also must have experience in business, finance, and local or state issues. State Democrats tried to add amendments requiring that managers must have at least some background in education and whose salary must be capped at the rate of the governor, about $159,000. The Republicans struck it down.

The emergency manager’s contract, salary, and financial plan must be publicly posted as well as expenditures of $5000 or more. They would have the power to take over public services such as utilities like water and electricity. Furthermore, they would also be able to dissolve entire municipal governments as they see fit, dismiss public officials as well as destroy union contracts. By appointing these officials, they are effectively handing “taxpayer money, services and powers to private companies”.

An illustration of the role emergency managers can play is the Detroit’s public school district, which has an emergency manager, Robert Bobb, already in place. The district is projecting a $327 million budget deficit and several proposals have been made including closing half of the district’s 147 schools which would push classroom sizes up to possibly 60 kids per class. It would replace individual school principals with regional ones and would cut all general bus service. Personally, I would wager that it would NOT push class sizes up to 60 kids because given the economic situation in Detroit, I doubt most school kids are going to be walking the vast under-populated blocks to get to a school by themselves, if they don’t get picked up first.

“It takes every decision in a city or school district and puts it in the hands of the manager, from when the streets get plowed to who plows them and how much they are paid,” said Michigan State AFL-CIO president Mark Gaffney. “In schools, the manager would decide academics or if you have athletics.”

The takeover of local services has already begun. Recently the emergency financial manager of Pontiac, one of three other cities with appointed managers, has fired the local police chief and liquidated its union contract. It is now being served by the larger Oakland County Sheriff Department which will begin May 1. Previously, due to layoffs, the city had been underserved with less than 40 officers.

So, not only is this bad for unions it’s bad for our entire electoral system. Our governments are handing our voice over to a few people that we did not elect which is what one can define as a “government takeover”. It is electing a governor to elect people for us. It also gives elected officials a huge disincentive to do the job they are paid to do. Where does it stop? Who determines if these emergency managers will ever go away? If a municipality became financially solvent, it is hardly unreasonable to expect that these people will be asked to stay on to “insure” that things keep running well, increasing more people on the tax payrolls.

Rick Snyder, a Republican, was elected last year succeeding the outgoing governor, Jennifer Granholm and has been billed as a “nerd”. He has taken a page out of New York Mayor Michael Bloomberg’s playbook, by being a multimillionaire and then foregoing the standard gubernatorial salary for $1 a year. He has declined to participate in debates with opponents opting to go directly to the people with his message. He is a former executive at Coopers and Lybrand and was CEO of Gateway computers, which went from 21,000 workers in 2000 to 7,400 workers in 2003, some of which were shipped overseas. After Gateway, he subsequently moved on to found two investment firms, Avalon Investments and then Ardesta.

There has been some controversy over the upcoming budget proposals for the state in that he has divided the entire $45.9 billion budget into two bills: one designated for education and one for “everything else”.

The fact that there are few specifics of how the budget will be allotted has been worrying since it doesn’t aid in the transparency of government finances. If the state is not held to task for defining where its money is going, it can be assumed that it is a forewarning of what we can expect from these emergency financial managers.

The governor said he isn’t trying to make the state’s spending plans murkier or take away lawmakers’ budget oversight. But he wants to be held accountable on whether his administration is able to improve Michigan residents’ health, education, safety and quality of life as measured by the Michigan Dashboard he has set up rather than whether he has spent money on programs lawmakers favor. “You’re still held accountable,” Snyder told The Associated Press.

It seems that to Snyder, this is more of a global approach. In reality, it just signals that anyone can do anything they want with taxpayer money.