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Michigans budget crisis puts democracy on the chopping block

By Paul Abowd, iWatch NewsWhen the city of Pontiac, Mich., ordered the closing of its fire department in December, Councilman Kermit Williams found out in the morning paper. This was just one in a series of radical realignments for the city, whose elected government has been replaced by one person with unprecedented power over nearly every aspect of city policy.Public Act 4, a law Michigan passed in March 2011, has cut elected officials like Williams out of the process. It allows Gov. Rick Snyder to give emergency managers unilateral powers over the municipalities and school districts they run.”They couldn’t get elected if they tried,” said Williams.Appointed managers can nullify labor contracts, sell public utilities and dismiss elected officials. Michigan cities Benton Harbor, Ecorse, Flint, Pontiac, and two school districts are under emergency management. Detroit, the state’s largest city, is under financial review by the state.Michigan is one of 23 states where the GOP has control of both houses and the governor’s mansion since the 2010 election. With the help of free-market think tanks, the state legislature used its one-party rule to pass a flurry of legislation aimed at the state’s prolonged great recession marked by auto industry flight and compounded by the 2007 housing market crash.The emergency law, an unprecedented austerity measure, is the centerpiece of their strategy. Gov. Snyder’s supporters say Public Act 4 allows a more efficient and nimble response to the budget crisis than local governments have been able to muster. Critics have filed suit and begun a petition campaign to repeal what they call a power grab that obstructs voting rights. Labor officials say the law is part of a nationwide effort by right-wing think tanks and their corporate backers to break up public sector unions.”We haven’t seen anything this severe anywhere else in the country,” said Charles Monaco, spokesman for the Progressive States Network. “There’s been nothing in other states where a budget measure overturns the democratic vote.”Fallout in the citiesPontiac’s Emergency Manager Louis Schimmel privatized city hall, firing Mayor Leon Jukowski, then rehiring him as a paid consultant. The City Council was not so lucky.Neither were the police and fire departments. Pontiac is now patrolled by the county Sheriff, and nearby Waterford Township will put out fires. In late December, Schimmel put hundreds of city properties, including City Hall, up for sale.Schimmel says he can do what elected officials have been unable to do: execute a plan for balancing the books quickly. Still, he has run into nagging structural roadblocks.In February, Gov. Snyder celebrated a rare $457 million surplus in the state budget. But legislators in the Democratic minority say his administration has not eased the financial strain on cities. Changes to the corporate tax code are expected to reduce business tax revenue by $1.7 billion this year, and city governments will see a 10 percent cut to the $1 billion revenue-sharing budget.”One thing we can’t do is print money,” said Schimmel. “We’re always chasing the dropping knife, fixing something here and losing revenue somewhere else.”City officials like Williams say the emergency manager approach has been tried, unsuccessfully, for more than a decade. Public Act 4 is a strengthened version of a 1990 law that brought state appointees to several cities beginning in 2000.Appointed managers and elected officials have pointed the finger at each other for the worsening economic situation in the cities. Neither, however, has been able to provide more than short-term fixes to the long-term flow of jobs, residents and revenue from the cities.Pontiac has been under some form of state-appointed management for three years, during which time the city’s credit rating has dropped from B to Triple-C. The city is projecting a $9 million deficit for 2012.”They aren’t creating revenue,” said Councilman Williams.
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