Flint appears to be the next city in line for an Emergency Manager in Michigan. With only a $2 million deficit, it is still undergoing the initial review process. This is odd because, as Brandon Jessup of Michigan Forward notes, other cities with much larger problems have had their requests for an EM denied.
Interesting, though is how Flint, facing a $2 million deficit, is under review when other municipalities like Allen Park and Jackson were refused preliminary reviews. In May, Jackson mayor Karen Dunigan requested a preliminary review from the state’s treasury department based on the city’s accumulated pension debt of $20 million and $47 million in bonded debt. Allen Park followed suit,citing the city’s bond rating falling to BBB. Both of these cities could be granted a review under the new law, since they’ve hit a few of the laws triggers; however Michigan’s Treasurer denied both municipalities a preliminary hearing.
David Holtz, Executive Director of Progress Michigan suggests this may be retribution by State Treasurer Andy Dillon against a former political opponent. From their press release:
“If Flint’s budget is in crisis it is a crisis created, in large part, by the policies of Governor Snyder and the Republican Legislature, which has cut nearly $100 million in state revenue sharing to local communities like Flint,” said David Holtz, Executive Director of Progress Michigan. “Flint’s mayor and city council have been working hard and making progress toward solving the city’s budget deficit. But instead of offering a helping hand, State Treasurer Andy Dillon is wielding a political hammer and threatening to hijack Flint’s democratically elected local government. Flint residents’ freedoms and future are now at risk of falling prey to an unaccountable emergency manager.”
Holtz noted that Flint’s elected local government adopted a budget that cuts 15 percent from last year’s budget, and that Flint Mayor Dayne Walling is in the midst of negotiations with the city’s employee unions over those cuts. Mayor Walling, Holtz pointed out, is also up for re-election this year and for Andy Dillon it may be payback time. Walling, a Democrat, supported Lansing Mayor Virg Bernero over Dillon in the 2010 Democratic primary for governor. Dillon lost the primary to Bernero, who went on to lose to Snyder in the November general election. Snyder appointed Dillon state treasurer upon assuming office.
“Although he may deny it today, it was no secret that Dillon courted Mayor Walling for his endorsement for governor,” said Holtz. “Dillon was bitter and resentful after his loss. Now he holds extraordinary power over Flint and its politics and is using it in a way that embarrasses Walling in the middle of his re-election campaign. That’s one of the reasons the Emergency Manager law is so wrong for democracy: It places too much power in the hands of unelected officials –power that can be misused.“
One Flint citizen, Paul Jordan, a plaintiff in the Sugar Law Center lawsuit to declare Public Act 4 unconstitutional, wrote a striking letter to the Flint Journal. In the letter he points out some of the myths surrounding the cities who are being considered for an EM and raises excellent points about the sale of public assets by EMs to achieve their short term goals.
The emergency manager law is based upon a cruel and false assumption: That the revenues of local governments have nothing to do with the financial distress that so many localities—including Flint—experience.
The reality is that cities in financial distress have residents who are much poorer, have lower property values,and have a much greater proportion of vacant properties (on which taxes are probably NOT being paid)…It is also false that cities that are in financial distress irresponsibly spend an exorbitant amount of money compared to those that are not in distress.
Some of the cities where emergency managers have been imposed have had some distinctive and even unique assets. Emergency managers have disposed of some of these assets, allegedly in an effort to make more money available to support local services or to pay local debt.
The emergency manager law is a cruel hoax that deserves to be set aside, either through the ballot box or by the courts. We need to squarely face the real but difficult issue of how to adequately and fairly fund our cities.
(One slight error in Jordan’s letter is tying the leasing of Jean Klock Park in Benton Harbor to the Emergency Manager. That lease actually took place well before Joe Harris entered the picture. However, the point about the fire sale of public assets to achieve short term goals is well-taken and his letter is well worth a read.)
Meanwhile, Highland Park Schools are looking down the barrel of an Emergency Manager, as well.
Gov. Rick Snyder is to appoint a team to conduct a “financial management review” of Highland Park Schools, moving the troubled district closer to appointment of an emergency manager.
Superintendent of Public Instruction Mike Flanagan sent a letter to Snyder this month asking him to order the review after Flanagan’s preliminary study determined the district had the state’s worst deficit and most drastic enrollment drop.
While the Superintendent was on board with this, a member of the School Board is not.
Robert Davis, secretary of the school board, said Tuesday he’s confident an emergency manager can be avoided. He said he doesn’t think the financial management review is needed because the board and Superintendent Edith Hightower are following the state’s directions on reducing and eliminating its deficit.
“I don’t think an emergency manager will be necessary,” Davis said.
The Emergency Manager juggernaut rolls on. Meanwhile, Governor Rick Snyder and legislative Republicans are now turning their guns to the elimination of the personal property tax. This move will hit some cities with yet another major loss in revenues.
One of Governor Rick Snyder’s top priorities this fall is phasing out the personal property tax.
Summer Minnick with the Michigan Municipal League doesn’t disagree with that part of the plan so much. Minnick says administrating the tax is complicated and costs local governments quite a bit of money to assess. The problem is, it also generates about $1.2 billion annually with around $800 million of that money going to those same local governments.
“It is a critical component of a municipality’s budget,” said Minnick. “In many cases it can be 20 to 50 percent of the city’s entire taxable value so it’s something we’re very concerned with.”
The amount cities bring in from the personal property tax varies wildly across the state. Lansing gets about $3 million a year in property tax revenue from the tax. That makes up a little less than 10 percent of the property tax revenue the city takes in overall in a given year.
A city like River Rouge on the other hand, gets 57 percent of its property tax revenue from the personal property tax.
Fun times, kids. Fun times.