Emergency Financial Managers: Good Idea or Bad for Democracy?

[XLFD]

Three articles have appeared in the Daily News in the last month about a group of local people that are trying to get signatures for a petition to recall Michigan Governor Rick Snyder and to repeal a recently passed law that empowers State officials known as Emergency Financial Managers (EFM) to intervene in local affairs if certain conditions exist.

Here are the first and the last of those, they are shortened versions of those that actually were in the newspaper: 

LDN 7-11-11

LDN 8-11-11 EFM

 

The main bone of contention for these local citizens with the new 'amped up' law appears to be the ability of the EFMs to terminate union contracts after the new law has passed.   Like Wisconsin's governor has found out, if you try to tweak the Public Service Unions, be ready to get some vocal and visible opposition. 

The original act was adopted way back in 1988, and was used 3 times by Governor Engler and 5 times by Governor Granholm.  It has not been used by Gov. Snyder, and the only 4 active EFMs were instituted and appointed by Granholm.  Here is the new law passed this year, followed by its statement of purpose (section 3):

Act 4 of 2011

The legislature hereby determines that the health, safety, and welfare of the citizens of this state would be materially and adversely affected by the insolvency of local governments and that the fiscal accountability of local governments is vitally necessary to the interests of the citizens of this state to assure the provision of necessary governmental services essential to public health, safety, and welfare. The legislature further determines that it is vitally necessary to protect the credit of this state and its political subdivisions and that it is necessary for the public good and it is a valid public purpose for this state to take action and to assist a local government in a condition of financial stress or financial emergency so as to remedy the stress or emergency by requiring prudent fiscal management and efficient provision of services, permitting the restructuring of contractual obligations, and prescribing the powers and duties of state and local government officials and emergency managers. The legislature, therefore, determines that the authority and powers conferred by this act constitute a necessary program and serve a valid public purpose.

 

Mlive posed some of the reasons and both sides of the issue when this law was passed  Mlive: 3-15-11 

I particularly liked the last paragraph:  "Local elected officials would be stripped of significant powers, but supporters of the legislation say they could be removed from office only if they repeatedly refuse to comply with requests for information." 

And, in my opinion, that's the reason why most of these local municipalities and regions are suffering such financial distress, they fail to be truly open in their financial dealings which leads to corruption and misuse of the public funds and the public's trust.

 

So is the limited usurping of local governments and overriding collective bargaining in 'emergency financial' situations, with the powers as authorized by state law, good or bad?

[Edie Lindsey]

What's stopping our Federal Government from making one of these EFM Acts up to overlook the "recovery" of an ailing state?  The Constitution?  Has that stopped them before?

And what about the Michigan Constitution?  Don't they have safeguards written in to protect the Home Rule of cities and school districts?

This law may help some areas, but I am inclined to agree with the local Demmies on it.  I don't think Snyder should suffer for it, however, that's just the unions venting.

[XLFD]

State law is a bit more restrictive on local powers than Federal law is on State powers.  That is an interesting thought though, imagining the Feds with all their foibles sending in people to rescue a State in trouble.  I can just see President Obama sending in his czars during the Granholm years to 'rescue' Michigan.

[Willy]

I think local decisions should remain local.  It's up to the voters who put these people in power to correct the situation. That's the only way most people will become involved. 

[Lisa O'Brien]

I think I am for it, if years upon years of bad decisions and corruption has left a city unable to pay it's bills. I think the state should step in and take the necessary steps to resolve the problem.

[Sweater Cows!]

I would prefer to see a (rule?) or something that says instead of the state taking over the state will come in and ASSIST in appoint a new group of people to run whatever the groupis that is unable to function properly. but the MOST important part of that would be that the "appointment" would be through a lottery, just like jury duty. All registered voters in the city/district/etc... would be able to get a seat. Take all the registered voters in the geographical location of the group needing replacement,  put the names in a bucket and draw. Call/mail/stop at there house an leave notice(process server) each person drawn ask if they want the seat, if they don't then they draw someone else until they fill the seats. Then at the next scheduled election people who want can run for the seats, but those who have held the seats (via prior elections)in the last 3 election cycles cannot run.

[Lisa O'Brien]

The problem with this method is that a lot of unqualified would get the seats. When a city is on the verge of bankruptcy they need someone who has a business degree, someone that has the ability to make the right decisions not based on what the city's residents want, but on the reality of what they can afford. Someone that see's the bigger picture, not just the present. Someone who has the ability to throw out union contracts that are no longer financially feasible with the current tax base.

[XLFD]

I'm more inclined to go with Lisa's viewpoint.  An EFM is only used when certain triggers are reached; as long as those triggers are well-defined and the law is consistently used for true fiscal emergencies, the EFM can be an effective tool (or deterrent for poor money management).

[Sweater Cows!]

I have to completely disagree. Just because someone sat through some college courses for business does not make them any better of a decision maker than a housewife or a factory worker, or any other career choice or lack thereof. I think that the so called 'educated' person could actually be a much bigger problem than 'commoner'. Those 'educated' sorts are the ones running our gov't and we can see where that has put us so far. College education is over-rated IMO.