Michigan bill: Governer to gain power to dissolve towns.

[SirNitram]

Link

Michigan State Treasurer Andy Dillion’s bio includes work as a corporate restructurer, so perhaps it is natural that he would look to the corporate world for ways to deal with the growing number of towns that are verging on insolvency.

State officials estimate that dozens of local governments and school districts will soon be unable to pay their bills and the Treasury dept. is on record supporting a bill — passed by the House last week — which would recast Emergency Financial Managers as Emergency Managers and give them unprecedented new power to fire elected officials, dissolve labor contracts and reorganize or dissolve cities and school districts.

Supporters of the measure say that it is needed because the leaders of some towns and schools have been unable to muster the political will to take unpopular budget balancing steps.

Because the bill establishes no process for how appointees can carry out their new powers and specifically lays out that Emergency Managers need not consult with a community’s elected representatives, some worry that corporate managers, appointed by the governor, could liquidate community assets to cover debt and leave towns no better off than they were.

What values will guide these individuals or firms as they work to balance budgets?

How will a manager decide whether to sell off an ice rink or a library?

The Treasury Dept. is in the process of training potential Emergency Managers, so the Messenger asked for some details of the training in hopes of better understanding the motivations and priorities of the folks who may soon take over our schools and towns.

It turns out the training itself was mostly outsourced to the law and accounting firms — Plante & Moran, Plunkett & Cooney, Miller Canfield, Foley & Lardner — already involved in emergency financial management of Michigan towns.

The training was not conducted by Treasury, spokesman Terry Stanton explained. “It was administered by Dr. Eric Scorsone at Michigan State University, in conjunction with the MI chapter of the Turnaround Management Association, with support from the department.”

Though Treasury was slow to provide details of the event, Kevin Lucey of the Bloomfield Hills accounting firm O’Keefe and Associates, a member of the Michigan Chapter of the Turnaround Management Association, provided an agenda for the day and half long event which was held at MSU’s Henry Center for Executive Development on Feb. 9 and 10.

About 60 people, mostly accountants, lawyers, former city managers, and “private sector turnaround specialists” attended the event which featured “war stories” by many current and former Emergency Financial Managers, Lucey said.

Though the House had not yet finalized its bill to expand Emergency Manager powers at the time of the training many participants were excited about the tools it seemed ready to extend to them, Lucey said.

“The legislation as it previously was didn’t give you much of a sword, it did not really allow you to deal with the biggest items like pension and post retirement options,” Lucey said. “Going after the contracts is kind of what everyone has been waiting for.“

Lucey said that attendees were also excited about a provision of the bill (removed in the House but slated for reconsideration in the Senate) that would ban elected officials in towns where financial emergency is declared from running for office for 10 years.

He said there were real differences among the current and former EFMs in terms of how they relate to elected officials.

“A lot of them say that the relationship with city council is horrible, so they say it is best to stay away from councils, don’t go to their meetings, don’t provoke them. Others seem to be more about communicating.”

Eric Scorsone, former senior economist with the state Senate Fiscal Agency, is an extension specialist with MSU’s department of Agricultural, Food and Resource economics and is working on a Mott and Ford Foundation-sponsored research project on chronic fiscal stress in shrinking cities.

Scorsone coordinated the event and gave a presentation on the basic roles and responsibilities of an Emergency Financial Manager under current law.

Most cities that have had an Emergency Financial Manager have common problems like lack of bank reconciliation, and basic financial reporting problems that can be addressed with common approaches in terms of forensic accounting, he said.

“Is your payroll being accurately compiled? How are you controlling vendor contracts?”

But beyond organizing the books in a town or school district, when there isn’t revenue to pay the bills how would emergency managers decide what public services to cut? How would they decide what functions to consolidate with other communities or whether to dissolve the whole town?

“Now you are talking about a more politically sensitive topic,” Scorsone said, and he pointed out that the House added in a provision that would allow elected officials to break labor contracts in some circumstances, a move that could reduce the chances that complete power is ever vested in an Emergency Manager.

Scorsone said that he thinks the governor wants to push communities to make hard choices about their budgets by showing them that if they don’t make painful cuts, a state appointed Emergency Manager will do it for them.

The proposed bill does not give details as to what actions an EM should take first when it comes to restructuring a town, and an appointed manager could decide to start with extreme measures such as dismantling a town, Scorsone said.

“It’s unclear to me how that would actually work,“ he said, “how services will be provided.”

“Unlike in a corporate liquidation, the citizens don’t just go away.”

Working out the details of some of these extreme measures is stuff for another more advanced training, he said.

“In April or May we may get into questions like how does one dissolve a town.”

Treasury spokesman Terry Stanton said no dates for further raining have been finalized.

A month or two and then, then we might get some answers on whether a governer appointed guy can simply say 'Okay, fuck contract law. Let's fuck over funding for these things too.. And to round it off, I'm dissolving your municipality'. Emergency Powers. But when is there not an emergency of some kind...

[Fingolfin_Noldor]

To be honest, there are a number of towns that are in deep financial shit and there is serious talk of default of some towns.

Face it, the economic activity of the state has been dropping off the cliff that some towns might not be feasible. It's the same with Detroit and the urban rot that pervades the place.

[Alyrium Denryle]

To be honest, there are a number of towns that are in deep financial shit and there is serious talk of default of some towns.

Face it, the economic activity of the state has been dropping off the cliff that some towns might not be feasible. It's the same with Detroit and the urban rot that pervades the place.

But firing elected officials? Um... no. That is not OK for ANY appointed individual to do, or even other elected officials to do, anywhere in this country. I am not talking just about the state code not allowing it, but about the very basis for any sort of democratic government to say nothing of state constitutions.

The power to call for a referendum--to refer the vote to the muncipal population, sure... but not the firing of elected officials and dissolution of municipalities.

It sets a dangerous precedent. If allowed to happen, there would be nothing stopping the dissolution of the state legislature etc.

[Knife]

Let alone the fact that a town is not a business. You shut down schools,parks, ice rinks, etc... People will bail to somewhere with those services. This idea that you cut labor and rematch the company later doesnt apply to people and towns. Running towns and cities like a business is an analogy not forgone fact. They are two different things.

[Fingolfin_Noldor]

Let alone the fact that a town is not a business. You shut down schools,parks, ice rinks, etc... People will bail to somewhere with those services. This idea that you cut labor and rematch the company later doesnt apply to people and towns. Running towns and cities like a business is an analogy not forgone fact. They are two different things.

I believe that there is at least one town in the US (in California?) that has in fact subcontracted its police force and many municipal services to private contractors.

[Serafina]

Let alone the fact that a town is not a business. You shut down schools,parks, ice rinks, etc... People will bail to somewhere with those services. This idea that you cut labor and rematch the company later doesnt apply to people and towns. Running towns and cities like a business is an analogy not forgone fact. They are two different things.

I believe that there is at least one town in the US (in California?) that has in fact subcontracted its police force and many municipal services to private contractors.

Those are not elected officials.
This bill (if i understand it correctly) would outsorce elected positions (such as major) - it would essentially strip the residents of their right to be represented by people they elected.

[Rabid]

...

... So, will we see some towns in Michigan seceding from the state and forming the 'Confederated Cities of Michigan' over the matter of "Cities Rights" ?...


Pun aside... What the hell is this shit ? The absurdity of this proposal leaves me unable to formulate any coherent thought on the matter.

[Akhlut]

Further, it doesn't allow the people of the municipalities to decide what they want to keep and what they want to junk (and if they'd be willing to raise taxes or whatever) in order to balance budgets. It completely undermines democracy and is absolutely ghastly. I hope this is taken to court and is stopped in its tracks.

[Edi]

Finland has had a lot of municipality mergers in recent years when formerly populous but declining municipalities have been forced to merge in order to cut administrative overhead so that they can retain services. For example, the current municipality of Salo is an amalgamation of no less than seven different municipalities stitched together (Salo proper and the surrounding environs).

If the smaller towns in Michigan are going tits up, then there is no reason not to do mergers with others to get bigger administrative units, but if the article describes the process accurately, it's really fucking ass backwards. Such mergers should be negotiated first and done at swordpoint only if there are no viable options and the local councils refuse to do anything.

But what most clearly came through to me is the right wing glee about the possibility of being able to cut people's pensions and benefits in order to cut costs. Which Knife and the others already addressed.

[cosmicalstorm]

I've been hearing these kind of news concerning the US for a long time (mountains of debt and no outlook of every repaying it). I know of some reasonable people (might have been starglider) who went so far as to talk about a possible USSR-like breakdown of the US. Shit I hope that is wrong

[Alyrium Denryle]

Finland has had a lot of municipality mergers in recent years when formerly populous but declining municipalities have been forced to merge in order to cut administrative overhead so that they can retain services. For example, the current municipality of Salo is an amalgamation of no less than seven different municipalities stitched together (Salo proper and the surrounding environs).

If the smaller towns in Michigan are going tits up, then there is no reason not to do mergers with others to get bigger administrative units, but if the article describes the process accurately, it's really fucking ass backwards. Such mergers should be negotiated first and done at swordpoint only if there are no viable options and the local councils refuse to do anything.

But what most clearly came through to me is the right wing glee about the possibility of being able to cut people's pensions and benefits in order to cut costs. Which Knife and the others already addressed.

The bill passed by the state house specifically says that it is OK to give these emergency powers to dissolve municipalities to corporations... Yes. Corporations.

[Darksider]

The bill passed by the state house specifically says that it is OK to give these emergency powers to dissolve municipalities to corporations... Yes. Corporations.

Wait, seriously?

Delta City, Coming in 2012!

In all seriousness though, this is what we get for electing a governor with no experience outside the private sector. Seriously, the only thing of note I could find on Snyder's resume was that he ran Gateway computers (straight into the ground).

And yet somehow he was a more palatable choice to my dad's side of the family than Bernero because apparently "he yells too much. He's a yeller."

If we aren't going to pay enough attention to not elect corporate shills, then we fucking deserve everything we get.
EDIT: Oh, by the way, according to links in the article posted, he's also slashing school budgets and trying to cut domestic partner benefits for public workers. Get this, he apparently wrote a letter on the subject and referred to domestic partners as "the unrelated live-in companions of state workers and their dependants," and yet somehow claims this is a budget issue rather than a social one. What an asshole.

[blahface]

The bill passed by the state house specifically says that it is OK to give these emergency powers to dissolve municipalities to corporations... Yes. Corporations.

Maybe Robocop will come true.

[Patrick Degan]

I'd be interested in knowing just what conceivable theory of constitutional law allows for a state governor to place in the hands of an unelected bureaucrat or even to delegate to person(s) not even part of the government the power to dissolve elected bodies and civil municipalities. Expect this one to wind up in the courts.

[Darksider]

It seems to me that this is a result of Snyder's idiotic idea that we need to run Michigan like a corporation to restore the state's lost prosperity. Corporations appoint advisers to decide which assets need to be slashed all the time. Of course when he wants to do it with the state government, he runs into the little problem of it being illegal.

[TimothyC]

I'd be interested in knowing just what conceivable theory of constitutional law allows for a state governor to place in the hands of an unelected bureaucrat or even to delegate to person(s) not even part of the government the power to dissolve elected bodies and civil municipalities. Expect this one to wind up in the courts.

I don't know about Michigan, but IIRC in Ohio the city and village governments are considered legally to be subsidiaries of the state government.

[someone_else]

That's a measure that here is reserved only for situations where organized crime (mafia, n'drangheta or cammorra) is controlling such elected officials.
And afterwards there is another election asap to replace them anyway.

It is kind of against the most elementary democratic principles.
While I tend to agree that something like this may be useful in some situations where people doesn't bother to elect people able to do their work and if those areas aren't run properly the entire state will suffer dire consequences. Although not on a frequent basis.