A deep dive into Michigan’s emergency manager law

Jul 10, 2014

Detroit emergency manager Kevyn Orr's term is expected to be over this fall. So what next?
Detroit emergency manager Kevyn Orr's term is expected to be over this fall. So what next?
Credit State of Michigan

Three years ago, only a half-dozen cities and school districts in Michigan were being run by state-appointed emergency managers.

Today, 17 are in some phase of receivership.

That proves not only cities and schools in Michigan are facing tough times, but that Governor Snyder is making vigorous use of Public Act 436, the state's emergency manager law.

Bridge magazine writer Chastity Pratt Dawsey examines the effectiveness of the law and how it measures up to similar laws in other states in a report for the magazine's latest issue. She joined us today.

We also had Lou Schimmel on the show. He's served as emergency financial manager or emergency manager for Ecorse, Hamtramck and Pontiac. Right now he's on the transition advisory board for Pontiac. Our two guests explores a number of questions:

First off, why does the appointment of an emergency manager result in such emotional responses from residents?

Pratt said that people felt it’s taking away their voting rights. With a state-appointed overseer, the officials we elected have little power.

Pratt also noted the fact that Michigan residents voted down the emergency manager law by ballot referendum in 2012, only for the Legislature and governor to approve another EM law weeks later. That played into the emotional response as well.

Schimmel added that sometimes the EM act would make sense when the community was in crisis, and the state has the duty to think about what’s best financially.

But how about prevention from crisis ahead of time, like what North Carolina did?

“North Carolina has an intervention law, but you won’t see emergency managers in North Carolina, because [the commissions the state created] are there in the business, in the books of local municipalities, trying to prevent situations,” Pratt pointed out.

While other states have succeeded with more proactive approaches, Michigan’s law has been characterized as the most aggressive in the nation. It has been criticized for giving too much power to emergency managers.

What happens when the EM’s term is up? How can communities avoid sliding back into financial trouble?

Schimmel shared his experience working as an EM for Pontiac and said that it's a gradual change. In the beginning of the transition period, a chief assistant was appointed to hold regular meetings with mayor and council as training sessions, regarding budget matters and so on.

How would things go for Detroit, once Kevyn Orr’s term is up this fall?

Pratt pointed out that Detroit is a very unique entity for this matter. As part of the "grand bargain," there is a new review commission created just for Detroit. “The big question is how the review board is going to play out. We need cooperation and sustainability to move forward. How do we sustain this and minimize game play? There’s a lot of money, a lot of people’s lives [involved].”

* Listen to full interview above.