Politics & Government
1:53 pm
Fri September 28, 2012

3 things to know about Emergency Managers, our discussion on Stateside

Under PA 4, EMs can strip local leaders of their power and do away with union contracts.

The law is being targeted for repeal in a voter referendum.

Michigan voters will either keep it or kill it.

So, what do the people close to the EM law think of it?

Here are three takeaways from yesterday's discussion on Stateside with Cynthia Canty.

1) Today, Michigan's cities have giant infrastructures and tiny budgets

The panelists noted the difficulty of managing cities like Flint and Pontiac, where populations and tax bases have sharply declined, leaving behind under-funded, crumbling infrastructure.

“As much as we don’t like to talk about it we have to keep this in mind--the city of Pontiac about 5 years ago had $58 million to spend in its general fund--today it has $29 million,” said Louis Schimmel, Pontiac's Emergency Financal Manager.

“The drop is so dramatic and the cuts that need to be made to deal with a budget of $29 million instead of $58 million are massive.”

The problem can seem insurmountable, so much so that Schimmel said he has seen city councils that don’t even want to know the budget numbers.

Mayor of Flint Dayne Walling said that local leaders need to rethink where tax revenue comes from and how to make use of it.

“We’re not going to revitalize Detroit on a 1950s or 1960s local government revenue model. I know it’s not going to happen in the city of Flint,” said Walling.

2) Financial literacy is needed at the local level

One argument for Emergency Managers is that many city council members lack the financial expertise to handle big budgets.

The panelists all agreed that more education is necessary if city councils are going to take back and maintain control of their budgets.

Roger Fraser, Deputy State Treasurer for Local Government Services, noted that to be a city council member in most places, a person needs only to be a certain age and a registered voter, and that these people essentially act as “the board of directors for a multimillion dollar corporation.”

Mayor Walling said that he wants an exchange of education between EMs and city council members, but he doesn’t see that as the goal of PA4.

Fraser agreed. "We’ve been trying to focus on not just the finances but the long term health of the city in terms of its leadership and its infrastructure," he said.

3) Planning for life after an EM

Lack of coordination and exchange of expertise between EMs and city councils have led many to question what will happen once EMs depart—voluntarily or through repeal of PA4.

Schimmel said there are plans in place.

“The act does provide that we provide a 2 year budget as we leave and that oversight take place. But I’ve always said here, ‘I’m not going to leave with a 2 year budget going forward—I’ll leave them a 5 year road map to follow.’”

Mayor Walling was not so sure, questioning the overall health of Michigan’s economy.

“Whatever budgets are planned for each of these places, what we know is that if revenues drop by the same nominal amount in the next five years as they have dropped in the previous 5 years, then there won’t be any money to spend,” he said.

Whatever happens with November's referendum, Fraser said, questions remain.

"I think we’re well satisfied that the PA 72 model is insufficient, so, if PA 4 is done away with, what can we do to come up with a model that still works and gives local units the ability to correct mistakes that we’ve made over years and years and years?” he said.

You can see the full Emergency Manager discussion here.

- Jordan Wyant, Michigan Radio Newsroom