Emergency Manager Law, Emergency Managers, Joe Harris — March 20, 2012 at 10:05 am

Emergency Manager panel discussion in Ann Arbor – 3/19/2012


We all agree, this isn’t easy

Last night, the Gerald R. Ford School of Public Policy at the University of Michigan held a public panel discussion on Public Act 4 — Michigan’s Emergency Manager law. On the panel were Deputy State Treasurer for Local Government Services Roger Fraser, Chairman and CEO of Michigan Forward Brandon Jessup, Benton Harbor Emergency Manager Joe Harris, and Flint mayor Dayne Walling.

The four men gave opening remarks before taking questions. Roger Fraser talked about how the state really does not want to have to resort to an Emergency Manager and that PA 4 gives them the tools they need to act early, before one is needed. “If an EM is appointed,” he said, “It provides them with the tools to solve the problems quickly.”

Fraser also talked about the alternative: Chapter 9 bankruptcy. He has spoken with the city manager of Ventura, California, a city that went through that process. “They have just been through Hell”, he said. “They have faced all sorts of irritation” as they work with creditors and “labor agreements were set aside by a judge. We would hope at PA 4 offers a more orderly alternative to that.”

Not every government unit that they look at ends up with an EM, he told the audience. “Benton Harbor schools were found able to solve their own problems.”

Fraser finished by saying that PA 4 is “more about assistance programs than a takeover.”

Brandon Jessup offered a different perspective saying that he was “honored to bring his remarks to the University of Michigan as an OPPONENT to PA 4 and as a PROPONENT of democracy.” He described PA 4 as “a naked power grab and a clear threat to voters across the state.”

With the current administration, Jessup said, “Financial emergencies have become the tools for the looting of public assets.” And, he said, with outsourcing of public services, “small businesses and local vendors have the most to lose. As this epidemic spreads across the state, local vendors lose access to federal dollars used to help local economies recover.”

He told the audience that a Grand Rapids-based Super PAC called “Michigan Citizens for Fiscal Accountability” has asked to review their petition submissions and that they expect a vigorous fight against their referendum to repeal PA 4. Michigan Forward and the Stand Up For Democracy coalition will be presenting a plan today for a statewide bipartisan Recovery and Reinvestment Task Force to help encourage reinvestment in Michigan’s hardest hit municipalities.

He finished by saying, “We cannot trample democracy in order to deal with an financial emergency.”


Joe Harris started off his remarks asking a number of questions about what the responsibility of the state is when municipalities are in crisis and how far that responsibility should extend.

“We cannot afford to expect financially distressed local governments to reverse their declines if they are not making dramatic changes. Nor can we afford to expect conditions to be corrected by those steadfastly adhering to failing methods. I submit to you that the consequences of inaction by the state are untenable and that the state’s involvement in the affairs of financially distressed local governments is imperative,” he said. “In any situation we should choose the wisest course of action, particularly in an emergency. PA 4 provides the wisest course.”

Harris said that “PA 4 corrects the deficiencies of PA 72” and allows local govts to erase and correct past bad decisions. Regarding those who oppose PA 4, Harris said that “it displeases those that benefit from those agreements, special interest groups, and government officials.”

“Bankruptcy,” Harris said, “is for resolving the claims. “However, the underlying causes remain.” PA 4 is “for rectifying the underlying policies that caused the crisis in the first place.”

Harris stressed the importance of state action under PA 4 to “protect communities that are impacted by failing cities.” He then gave a laundry list of the many problems and mistakes made in Benton Harbor and the things he has done to fix them.

Mayor Walling talked more about the the causes of the crisis in remarks. He spoke about the decreasing funding from the state to municipalities over the year. “Cuts to cities were bipartisan,” he said, referring to the fact that both Democratic and Republican governors have done it.

Walling talked about the hard cuts he has had to make. He was able to “get movement on many union agreements” but was forced to lay off many cops and firefighters when they wouldn’t agree to cuts. He reduced the number of city employees from 1,200 to 700 and was still reelected by a 57-43% margin despite the cuts and the increase in taxes.

Waling said, “We cannot go back to the political tug-of-wars that hurt the city.” Flint didn’t have a long-term plan in place when they came out of receivership the last time, he told the audience. “We are doing that now with a grant from the Obama administration.”

“What’s happening in our central cities is due in part to policies that encourage and subsidize sprawl.” The outcome of this is that areas around cities “benefit from the what the cities offer but don’t contribute to it. A lot that can be done on the revenue side that would bring equity to the situation.”

The panel was asked what the alternative to PA 4 would look like and the moderator asked them to focus only on short and medium-term solutions.

Jessup sait that it’s critical that the state help government entities restructure their long-term debt. “We can’t put all of the responsibility back on the employees,” he said.

Fraser said, “What’s become clear to me is that cities have modeled their employee compensation plans on the auto companies.” The auto companies have been forced to shed many of these obligations, he said, but governments can’t walk away from their obligations. “If they can’t resolve the pension benefits hole they are in (with the help of the state), it’s hard to see how they can move forward.”

Harris said the answer is cuts. “When you listen to government officials, etc., they always talk about bringing in more revenues. The short term solution is to cut costs.”

Walling disagreed with Harris. He said that local income taxes are only allowed in a few places, as permitted by the state legislature. Flint cannot currently impose a city tax. If he were able to levy a 1.5% city tax like other cities are able to do, “i would bring in $1.8 million annually and we could eliminate our debt in three years.” “Property tax revenues have dropped 24% in the past year alone,” he said, so they cannot rely on them.

The panel was asked about privatization and selling of public assets. Harris said, “you may be misinformed if you get your news from The Rachel Maddow Show. “We have privatized nothing in Benton Harbor.” The leasing of Jean Klock Park to the Harbor Shores golf course, he said, took place before he arrived.

Fraser said, “It’s the duty of the government to be the most efficient so privatization should always be on the table.”

Jessup talked about the Detroit Water & Sewerage Department. It generates revenue, he said, so in selling it, Detroit would “lose money and transparency.”

The most contentious moment of the evening came when the panelists were asked to address PA 4’s disproportionate impact on people of color. Harris bristled saying, “It’s simply because people of color happen to live in those cities. They often cannot afford to leave, often due to education.”

Mayor Walling said, “Property values are more closely tied to race than income. We’d be missing something if we talk only about historical trends. Race and racism are still a factor. That’s why we need to talk about regional solutions.”

Jessup said that he is part of the first generation of blacks that didn’t need the National Guard to go to college. However, he finds himself “less adequately prepared” because he went to Detroit schools. “After a few generations,” he said, “this becomes widespread. This causes people of color to disinvest in education” which only compounds the problem.

I came away from the evening with a number of impressions. First, I actually appreciated Roger Fraser a lot more after hearing him speak. He was respectful of those with whom he disagrees and seems to truly care about finding ways to solve these critical problems that involves the local community. However, in in comments he made to the Detroit News, I wonder how sincere that is:

Fraser also said the vehement opposition to state intervention is a sign of how Detroit got into its financial trouble.
“There’s this sense that nobody but the people in Detroit can resolve the issues in the city,” he said. “When you take a look at the past decade and a half, all the people of Detroit have managed to do in leading that community is put it deeper in debt.”

It’s this type of commentary that seems to place the entire blame for the failure of our aging manufacturing cities on inept and/or corrupt leadership that prevents effective partnerships from being possible. It is reminiscent of the callous comment by Governor Snyder last week that Detroit’s rejection of an Emergency Manager or his proffered Consent Agreement is due to a “cultural problem” in Detroit.

I also disagree with Fraser’s comment that “more about assistance programs than a takeover”. If I saw any evidence that the state was actually trying to help cities and schools, I could believe this. But I don’t. What I see is money being taken from schools, revenue sharing being decreased for cities and little if any true investment in these hard-hit areas that need help.

Joe Harris was even less tactful. It’s clear that he blames poor leadership in Benton Harbor for much of their crisis. No matter how true that is, his obvious derision and patronizing comments are the exact opposite of what is needed for a partnership that will be able to find both short and long term solutions for that city.

Brandon Jessup makes a compelling case for not using financial emergencies to disenfranchise voters, privatize government services and selling off of public assets. However, as his group moves forward to making the case for repealing PA 4, they are going to need to be able to have good answers for the question “If not PA 4 then WHAT?” The task force plan his group will release in the coming days may be a good step forward toward that.

Mayor Dayne Walling continues to impress me. He’s a very good politician and is very skilled at finding a middle path between strong opinions on both sides of the Emergency Manager issue. He refutes Harris’ claim that it’s all about cutting but also recognizes that things must change and that those changes are difficult.

From what I have seen, Walling’s relationship with the Emergency Manager in Flint is probably the best example of how it should work. What’s unfortunate is that the approach taken by the Snyder administration and those that speak in support of PA 4 drives wedges instead of building bridges between different groups, including the state. If PA 4 is ever going to be successful, they need to change their approach, be more respectful of those who they are impacting and do the things needed to build coalitions and partnerships.

I wonder if that is possible and I wonder if maybe it’s too late.

[Image credit: Chris Savage | Eclectablog]