After some legal disputes were resolved, the Emergency Financial Manager (EFM) legislation for local governments has been placed on the November ballot. As you may know, Michigan has had a provision for a state-appointed EFM for over 20 years now, but the recent Public Act 4 of 2010 gave the Emergency Financial Managers considerably more powers (to void labor contracts, sell assets, outsource services, and so on). Among the Michigan local governments operating under an EFM are Ecorse, Benton Harbor, Flint, Pontiac, and the Highland Park School District, which recently outsourced instruction to a charter school. Moreover, the city of Detroit has been close this past year. The city has been in negotiation – and in conflict – with the state trying to prevent both a bankruptcy AND the appointment of an EFM.
Critics of the new act argue that the EFM has too many powers, and among other problems, this side-steps democracy, but it at least temporarily voids voter choice, representation, and democratically elected city officials, in favor of a single financial manager.
Supporters argue that democracy failed to keep these local governments from going bankrupt or near-bankrupt, and difficult short- and long-term solutions (that elected officials haven’t made) must be made in order for a local government to survive.
Because the matter of PA 4 has been approved for the November ballot, the previous EFM legislation is now in effect. If PA 4 is overturned by voters in November, presumably the original act will continue to be in effect.
It will be interesting to see how this plays out. My guess is that most Michigan voters will likely support PA 4, because the average voter will focus on results, rather than the politics that surrounds this issue. If an EFM can balance a city’s budget, cut local employment, and put a city back on track toward financial sustainability, then I’m guessing there will be support for retaining PA 4.
If this occurs, we are probably looking at the beginnings of a new model of local government, where many services are contracted out (to private firms or to other governments), where there are very few public employees, and where there are more inter-local agreements to share costs and provide services. Not sure what will happen to the revenue side (isn’t this what caused Pontiac’s and Flint’s problems in the first place – massive revenue loss when GM left both cities?), but I guess that is a different story still to be told.
John Klemanski
Critics of the new act argue that the EFM has too many powers, and among other problems, this side-steps democracy, but it at least temporarily voids voter choice, representation, and democratically elected city officials, in favor of a single financial manager.
Supporters argue that democracy failed to keep these local governments from going bankrupt or near-bankrupt, and difficult short- and long-term solutions (that elected officials haven’t made) must be made in order for a local government to survive.
Because the matter of PA 4 has been approved for the November ballot, the previous EFM legislation is now in effect. If PA 4 is overturned by voters in November, presumably the original act will continue to be in effect.
It will be interesting to see how this plays out. My guess is that most Michigan voters will likely support PA 4, because the average voter will focus on results, rather than the politics that surrounds this issue. If an EFM can balance a city’s budget, cut local employment, and put a city back on track toward financial sustainability, then I’m guessing there will be support for retaining PA 4.
If this occurs, we are probably looking at the beginnings of a new model of local government, where many services are contracted out (to private firms or to other governments), where there are very few public employees, and where there are more inter-local agreements to share costs and provide services. Not sure what will happen to the revenue side (isn’t this what caused Pontiac’s and Flint’s problems in the first place – massive revenue loss when GM left both cities?), but I guess that is a different story still to be told.
John Klemanski