Some Context on MI’s Emergency Financial Manager Law - EmptyWheel

[WillyT]

Some Context on MI’s Emergency Financial Manager Law
By: emptywheel
Monday April 18, 2011 9:08 am

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On Saturday, I described how the democratically-elected government of Benton Harbor, a poor, segregated MI city about an hour south of me, lost its power to the city’s Emergency Financial Manager.

There are two parts of the story that I didn’t explain, which this post from wizardkitten does well: http://www.wizardkitten.com/2011/04/benton-harbor-goes-boom.html First, the EFM law goes back some years in MI and EFMs already had a great deal of power.

The idea of the state appointing an Emergency Financial Manager for local governments in distress actually dates as far back as 1988, and that led to Public Act 72 of 1990 (Blanchard did it!). Basically, it said that in order for the state to protect it’s own credit and fiscal operations, any city or school district that was on the verge of bankruptcy would receive a review of their finances from a state-appointed team, and, if that panel found that the city or school district did not have an adequate plan to get out of trouble, a manager would then come in and help clean up the mess.

The manager could hire staff and direct existing staff. They did not need public approval for a new fiscal plan. They could do anything they wanted with the outstanding financial obligations (i.e., the bills). They could renegotiate labor contracts, but they could not abrogate those contracts. They could eliminate positions except of those of elected officials, cut pay and benefits even for elected officials, sell property, review payroll – anything but touch retirement. They could not raise taxes. They also had the ability to start Chapter 9 bankruptcy if all else had failed.

Michigan’s initial muted response to Governor Rick Snyder’s move to increase EFM powers derives, IMO, from our familiarity with the concept and the fact so many are at a loss to figure out what to do with cities gutted by globalization. We’re the frogs in the boiling water of globalization, I guess, and we didn’t notice the heat going up on democracy itself.

The other really important part of Snyder’s new empowerment of EFMs has to do with the real target: teachers. Specifically, the teachers in Detroit’s public schools:

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More: http://emptywheel.firedoglake.com/2011/04/18/some-context-on-mis-emergency-financial-manager-law/

:kick:

[Arctic Dave]

1. Parks and Recreation episode?

Strange.