Constitutionality of emergency manager powers questioned

Reinventing Michigan could mean voiding labor contracts, removing elected officials from office, and even dissolving whole cities, according to legislation that is moving quickly through the legislature.

On Wednesday the state House approved a sweeping expansion of powers for the officials who will be appointed by the governor to take over towns and school districts that can’t pay their bills.

Under current law the state can appoint Emergency Financial Managers to temporarily take over the finances of local governments that have become insolvent — this has happened in Hamtramck, Highland Park, Flint, the village of Three Oaks, Ecorse, Pontiac, Benton Harbor, and the Detroit Public School district.

The new law, which was requested by the governor, redefines these officials as Emergency Managers and gives them the power to end existing contracts, take over pension plans, reorganize departments, enter into agreements to restructure debt and dissolve or consolidate fiscally troubled towns and schools.

“We need to be proactive about difficult circumstances and face them head on,” bill sponsor Rep. Al Pschockla said as the House prepared to vote.

Pschockla said that the measure will protect taxpayers in more stable areas from the financial problems of harder hit areas.

But labor and education groups and people from Detroit, Pontiac, Flint and Benton Harbor object to the bill.

“This is one of the worst pieces of legislation we’ve ever seen,“ said Michigan Fraternal Order of Police Executive Director John Buczek. “The people who are voting for it in the House are the same people who talk about home rule and local control and this bill completely takes power away from local community and gives it to one individual.

“That kind of dictatorial rule is not good for anybody.”

Buczek said that he expects that Emergency Managers will swiftly use their new power to cancel contracts with police and firefighters.

“I could see us ending up in court over this,” he said.

“This plan is a slap in the face to the democracy our nation was founded on,“ state Rep. Shanelle Jackson (D-Detroit) said in a statement. “It removes elected officials from power and ignores the rights of our voters to choose their local leaders, and instead opens the door for one person to be in control of running our city.”

Jackson said that the plan violates the state Constitution by breaking local charters and disenfranchising voters. She also argues that it sets inadequate professional qualifications for emergency managers.

“If this bill passes it will have severe negative impact on all communities and all school districts in this state,” said Benton Harbor Mayor Wilce Cooke. “There is no oversight, no checks and balances in this bill.”

Treasury Dept. spokesman Terry Stanton said that emergency managers would file quarterly reports and be subject to the terms of his or her contract, which would be posted publicly.

Southeast Michigan Coalition of Governments Executive Director Paul Tate said that his group, as part of the Metropolitan Affairs Coalition has passed a resolution of concern about the bill.

“There was a recognition that the severe fiscal distress warrants some extraordinary measures,” he said, “but the provision of voiding collective bargaining doesn’t make sense and is unnecessarily anti-union.”
　
Tate said that unions have proved willing to compromise in order to help cities remain solvent and that collective bargaining is a rational process for solving problems.
　
State Rep. Mark Meadows (D-East Lansing) is asking Attorney General Bill Schuette for a formal opinion on the legality of granting emergency managers the power to void contracts.

“[O]ur state and federal constitutions contain “contract clauses,” he said, “both of which prohibit the state from enacting any law that impairs existing contractual obligations.”
　
A House Fiscal Agency analysis of the Local Government and School District Fiscal Responsibilty Act notes that declining property values across the state have resulted in reduced tax revenue for municipalities and tax-funded revenue sharing from the state, already down by a third since 2000, is set to be chopped again in the budget proposed by Governor Snyder.

Dozens of towns and 40 school districts are expected to face financial emergency soon.

The Treasury Dept. is in the process of training 50 prospective Emergency Managers.