Tuesday morning Emergency Manager Law round-up – 4/3/2012

Yes, it’s still the law

In what appears to be a never-ending saga of a ham-handed, clumsy implementation of a constitutionally-questionable law, the Snyder administration has finally won a court battle which put Flint Mayor Dayne Walling out of a job (again) and Emergency Manager Michael Brown back in (again). This and the continuing battles in Detroit and elsewhere to make the Snyder administration obey the law, in this case the Open Meetings Act, have slowed down the relentless push to install Emergency Managers in struggling cities across the state.

I should say that I don’t think the Governor actually relishes the thought of all these cities being his responsibility. However, I do believe that there are a significant number of Mackinac Center-minded Republicans in our state legislature that are thrilled at the prospect. And why not? It lets them accomplish in a couple of short years what they’ve been striving for for decades: the destruction of public employee unions and the privatization of as many government services as possible to for-profit corporations and businesses. It’s truly a dream come true for them.

Flint’s Emergency Manager Michael Brown recently wrote:

While it is true that the law gives broad powers to emergency managers, it doesn’t require the use of those powers. My role is to judiciously apply the expanded capabilities of the law. I choose to do this by working together with the elected officials, leaders, and residents of the Flint community.

And therein lies the crux of the argument, right? If Brown feels the need to tell us not to worry because they don’t have to use all their powers, why give them those powers in the first place. I’ll tell you why: because without that cudgel, Emergency Managers have little to beat down the unions with. So let’s be honest, at least, about that.

Enough of that. Let’s get on with the news.

• Detroit financial emergency Review Team blocked from meeting
  The review team assessing Detroit’s financial emergency has been blocked from meeting today because they have outlived their time limit. Robert Davis, a union activist and all-around thorn in the side of the Snyder administration filed a lawsuit to prevent them from meeting because they had gone beyond their term of office.

  An Ingham County judge issued a temporary restraining order late today, blocking Tuesday’s planned meeting of the state-appointed financial review team at which the team was expected to approve a consent agreement for the re-structuring of the City of Detroit’s financial management.

  Acting on a request from attorneys for union activist Robert Davis, Circuit Judge Joyce Draganchuk ordered the review team to refrain from voting on an agreement or meeting to discuss it, Davis said.

  Davis claimed in a lawsuit seeking the restraining order that the Detroit review team’s term of office expired March 26 and it no longer has the authority to enter into an agreement.

  This means that they will be unable to approve any consent agreement reached between the city and the state.
• Michigan Forward’s Brandon Jessup takes position with Obama for America
  Brandon Jessup, Michigan Forward chairman & Chief Executive Officer of Michigan Forward has taken a temporary leave of absence as CEO until January 31, 2013. Michigan Forward is the prime driver of the effort to repeal Public Act 4 – Michigan’s Emergency Manager law. Jessup has taken a position with Organizing for America as their African-American State Vote Director in Michigan. He remains Chairman of Michigan Forward.
  Michigan Forward is also working on an alternative approach to Emergency Managers for helping our struggling cities:

  Michigan Forward is working with Michigan Legislative Black Caucus (MLBC) on the Michigan Reinvestment & Recovery Task Force (MRRT). The MRRT is policy framework to deliver a system of recovery and reinvestment in Michigan’s core communities and school districts. Our plan brings local and state governments together to bring resolve to the epidemic of financial distress sweeping our state. We look forward to developing this legislation with the MLBC, building bi-partisan support and bringing additional partners on board.

• Joe Harris to remain Emergency Manager in Benton Harbor for the foreseeable future
  Jeff Fettig, the CEO of Whirlpool, loves what Joe Harris is doing in Benton Harbor saying, “Our view is that it’s working and a lot of progress has been made.” Unfortunately, that doesn’t mean Harris is going to be leaving anytime soon, despite what has been said in the recent past and despite all the crowing about how terrific a job he’s doing. In a recent meeting there, deputy state treasurer Roger Fraser told the audience Harris isn’t going anywhere:

  “I know an EM coming into the community is not without difficulty and not without pain,” Fraser said.

  But a fiscal emergency ends when a community is fiscally sound, he said. “We don’t believe that we’re there yet in Benton Harbor.”

  Just as a reminder: cutting costs to the bone in Benton Harbor (and elsewhere) does not resolve the intrinsic problems that these cities face which is crumbling infrastructure, a demolished manufacturing base, dwindling tax revenues and struggling school districts. Nothing that Joe Harris is doing will fix any of that so it looks like he’s going to be there for a long time to come.
  In other Benton Harbor news, Joe Harris finally got someone to buy his city radio station: Benton Harbor Area Schools.
• Muskegon Heights schools recommended for an Emergency Manager
  In an unsurprising move, the review team for Muskegon Heights schools has recommended that the district be taken over by an Emergency Manager.

  A review team is recommending Governor Rick Snyder appoint an emergency manager to run the Muskegon Heights Public School district. [...]

  The review team found:

  • As previously noted, the School District was approximately $1.4 million in arrears to the Public SchoolEmployees Retirement System through November 2011. (Section 13(3)(b)(iii)).
  • The School District had a general fund deficit of $8,472,543 as of June 30, 2011, which was not eliminated with­in the two-year period preceding the end of the fiscal year of the School District during which this Review Team report is received. (Section 13(3)(e)).
  • The School District is projecting a cumulative general fund deficit of $9,442,788 for the current fiscal year which ends on June 30, 2012, which would exceed 5 percent of the $17,600,387 in budgeted revenues for the general fund.

  The district was one of the rare groups to actually request an Emergency Manager after six years of deficits.
• Another Michigan village council threatened with an Emergency Manager
  The tiny village of New Haven on the northeast side of metro Detroit, population 4,375, is struggling and, after failing to pass a budget last week, was threatened with an Emergency Manager.

  The New Haven Village Council failed to adopt a budget during their March 13 and if one isn’t approved at the special meeting scheduled for 7 p.m. on Friday some sort of government shutdown could be on the brink.

  The budget Village President Jammie Kincaid is proposing was discussed briefly at the last meeting, but when it came time for action, a motion to instead table the issue was passed.

  “If on April 1 there is no budget in place you have what’s called a government shutdown, which means nobody gets paid in this village, which means you’re one step closer to an EFM (emergency financial manager),” Kincaid explained during the meeting. “I’ve talked with people in Lansing and people with the treasury and talked with state representatives. That situation is a very bleak situation.”

  Emergency Managers: the cudgel that keeps on cudgeling.
• State Rep. Bert Johnson: “No consent agreement without a bag of cash”
  In a rather audacious move, State Rep. Bert Johnson declared that the city shouldn’t accept any consent agreement unless it comes with money from the state – a bag of cash”.

  State Sen. Bert Johnson, D-Highland Park, encouraged council members to stand pat. Republicans, he said, told him they understand that any recovery for Detroit will involve “a bag of cash.”

  “Not a loan,” he said. “A bag of cash.”

  The state, he continued, won’t allow the city to go into bankruptcy.

  “I tell you, the state will pony up the money,” he said. “I’ve seen it. But you’ve got to call their bluff.”

  In the meantime, the Detroit City Council voted to borrow $137 million.

  The $137 million the City Council approved borrowing would be split, with up to $35 million to be used to address immediate cash-flow problems, and the remainder used to refinance some of the city’s debt. Selling the bonds would require the state’s approval.

  State Treasurer Andy Dillon has said the state would be willing to authorize the city to borrow the money to help address its cash-flow crisis — but that authorization would have to be part of a consent agreement — or “financial stability agreement,” as it is now being called.

• Detroit’s credit rating downgraded
  In a move that only increases pressure on both the city of Detroit and the Snyder administration, he credit rating agency Moody’s has downgraded Detroit’s credit rating :

  Moody’s Investors Service has downgraded more than $2.5 billion of Detroit’s debt as the city struggles through a prolonged fiscal crisis and Michigan considers installing a financial advisory panel or an emergency manager to keep the state’s biggest municipality from bankruptcy.

  “The downgrades are based on the city’s weakened financial position, as evidenced by its narrow cash position, reliance on debt financing to stabilize operations and ongoing labor concession negotiations,” Moody’s said in its report Tuesday.

• Detroit public employee unions threaten to walk if consent agreement is signed
  Detroit city employee unions have filed a lawsuit to prevent the city & state from signing a consent agreement that would impair their ability to collectively bargain for wages and benefits.

  Detroit labor unions on Friday filed a complaint against Snyder and State Treasurer Andy Dillon in federal district court asking for a temporary restraining order prohibiting the state or city from taking action on a consent agreement that would impair tentative labor agreements which the unions ratified last month.

  A response filed by Michigan’s attorney general challenged the request, saying the unions were not likely to succeed based on the merits of their case, adding there is no impairment of contracts since Detroit has not formally accepted the agreements with the unions.

  A judge scheduled the hearing on the temporary restraining order request for 2 p.m. EDT (1800 GMT) on Tuesday.

  If such an agreement is signed, they will leave the bargaining table:

  The unions completed concession negotiations with Detroit over a month ago and say they have no intention to resume talks based on Snyder’s plan.

  “As long as I am president we will not be back at the table prior to the expiration date of our contract,” Albert Garrett, president of AFSCME Council 25, told Detroit’s city council.

  The American Federation of State, County and Municipal Employees, or AFSCME, represents about half of the city’s unions and a third of the city’s employee headcount.

That’s it for today, kids. I can’t take any more…