Governor Rick Snyder says he expects teams of financial experts will soon start visiting cities and school districts showing early signs of financial stress. That’s part of the new state’s new fiscal emergency law he just signed.
Critics say the law gives too much authority to emergency managers appointed to run local governments that can no longer pay their bills. But the governor says too little attention has been paid to the early assistance the state is offering to local governments.
Democrats in the state Legislature want to voters to decide whether collective bargaining rights should be protected in the Michigan Constitution. But they will need a two-thirds majority in a Republican-led House and Senate to get the question on the ballot.
Governor Snyder’s office has just announced he plans to sign the controversial Emergency Financial Manager bills this afternoon. Unions oppose the bills, because they will enable state appointed financial managers to void union contracts in cities and school districts with serious financial problems.
Two controversial measures have cleared the Michigan Legislature and will soon await Governor Snyder's signature.
One would repeal the law that requires store owners to put price tags on most items in their stores, and the other would grant sweeping power to emergency financial managers.
Republican Senate Majority Leader Randy Richardville says he agrees with Governor Rick Snyder that Michigan’s item pricing law is outdated, and it’s time to allow retailers to upgrade their systems.
"I've been a proponent for, I don’t know, most of my career I’d say," said Richardville.
Once signed into law, store owners will soon no longer be required to put price tags on almost every item on their shelves.
Richardville says removing price tags will not hurt customers or confuse seniors:
"I don’t think anybody’s trying to maliciously cheat senior citizens. I think if the market demands such, people will make it easy to see what the prices are. Whether it’s individual item pricing, or something different, I think the store owners are pretty responsive to their customers," said Richardville.
Democrats say price tags protect consumers from being overcharged in checkout lines.
The item pricing vote fell mostly along party lines, but that wasn’t the only partisan bill moving through the Legislature.
The Republican-led House also gave final approval to a proposal that gives more authority to emergency managers of cities, townships or school districts.
The legislation passed on party-line votes.
Democratic House Minority Leader Rick Hammel says there are many "union-busting" pieces to the emergency manager bills, including elimination of collective bargaining rights at the local level.
"And on top of that, doing away with contracts of other folks that are just doing business with the local unit of government, so a lot of things that are really problematic for us in this," says Hammel.
Democrats railed against the measure for eliminating collective bargaining rights for public employee unions.
Representatives for the labor movement say they will be at the Capitol all week protesting those and other Republican proposals.
The controversy is one of the first big showdowns between Republicans and Democrats this year over government reforms.
Unions and Democrats have pretty much given up on trying to stop the measures. They’ve turned their efforts to limiting its scope to protect bargaining rights, as well as cap emergency manager salaries, and require them to periodically meet with the public – so far without any luck.
Doug Withey is a Teamsters bargainer.
“Every community in the state, every governing body has an open meeting. Have the public involved with that. Nope. Not reasonable. Vote it down.”
But Republicans like Senate Majority Leader Randy Richardville say an emergency takeover would be the last option after all else has failed.
“The intent of the legislation is to get into an emergency situation and fix it before it becomes a catastrophe.”
Governor Rick Snyder says his goal is not more state takeovers.
“Anytime you have an emergency manager come in, that’s a failure point. The best answer is to put in a better early-warning system – to figure out how to work with communities before they reach the point of needing a financial manager because a lot of things can be done in those earlier stages to avoid the issue and that’s the best answer.”
Right now, Richardville, Governor Snyder and Republicans have the numbers they need in the Legislature to prevail.
A teachers’ union leader says a proposal in the Legislature to give emergency financial managers sweeping control over school districts is a bad deal for educators.
The Michigan Senate approved the bills this week that would dissolve union contracts and eliminate collective bargaining rights at the local level if an emergency manager were put in control of a school district, city or township.
David Hecker is vice president of the Michigan division of the American Teachers Federation union. He says many financial problems can be better addressed through collective bargaining.
Hecker appeared on public television’s “Off The Record.”
“It either eliminates or severely undercuts collective bargaining – so it hurts the middle class – and it also hurts education. Because, you know, the problem with the EFM bill is if it’s an issue – and it’s an issue, there are districts and there are cities who are in financial difficulties – but you just don’t throw out a solution. You figure out what the problem is, and then you craft a solution.”
“We rather Governor Snyder work with us, we all work with the Legislature, and we work in support of communities, we work in support of the middle class, we work in support of our students. We think the EFM bill works against communities, works against the middle class, and is not good for our students. So Governor Snyder has a choice. We rather work together than become Wisconsin.”
“If people think we need this hammer to come to the table to say ‘yeah, health care costs are increasing, we have to address it. The school district’s in debt, we have to address it,’ we already do that at the table. You know, what do you say to a secretary of Detroit Public Schools who makes 22-thousand dollars a year and just took a three-percent pay cut?”
The House is expected to vote on the emergency financial manager bills next week. Governor Rick Snyder called for the reforms in his State of the State address.
As protests continue in Madison over a controversial bill removing collecting bargaining rights from some public unions, attention is drifting to Michigan.
Governor Snyder has responded to reports and protests by saying that he does not want to follow Wisconsin Governor Scott Walker's example, reiterating in an interview with WXYZ that he is eager to solve problems--including the specifics on $180 million dollars worth of concessions from state employees--through the collective bargaining process, and that he "was hired to solve Michigan's issues."
But whether Governor Snyder wants attention from national media or not, it is happening, including a ten-minute report on last night's Rachel Maddow Show.
But what does the law actually say? What is an Emergency Financial Manager? How are they appointed?
And if the title wasn't a clue, the explanation is a little long.
From the FAQ:
What triggers the Act?
Among the conditions specified in the Act are the failure by a unit of local government to pay creditors, the failure to make timely pension contributions, and payless paydays. In addition, certain officials, or residents, of a unit of local government may request a preliminary review under the Act, as may either the State Senate or House of Representatives.
What happens when the Act is triggered?
The State Treasurer conducts a preliminary review of the financial condition of the unit of local government. Once that review is concluded, the State Treasurer reports the result to the Governor. If a serious financial problem is found to exist in the unit of local government, the Governor then appoints a financial review team to conduct a more detailed review of the financial condition of the unit of local government.
What is the purpose of a Financial Review Team?
...[A] Financial Review Team...conduct[s] a more detailed review of the financial condition of the unit of local government. A Financial Review Team generally has 60 days (generally 30 days in the case of school districts) to complete its work and file its report. A Financial Review Team report must reach one of the following three conclusions:
-- A serious financial problem does not exist in the unit of local government, or
-- A serious financial problem exists in the unit of local government, but a Consent Agreement containing a plan to resolve the problem has been adopted, or
-- A local government financial emergency exists because no satisfactory plan exists to resolve the serious financial problem.
If the third conclusion is reached, or if a unit of local government signs, but subsequently violates a Consent Agreement, then a financial emergency is determined to exist in the unit of local government and an Emergency Financial Manager is appointed.
Who appoints Emergency Financial Managers?
For units of local government other than school districts, Emergency Financial Managers are appointed by, and serve at the pleasure of, the Local Emergency Financial Assistance Loan Board, which consists of the State Treasurer, the Director of the Department of Management and Budget, and the Director of the Department of Energy, Labor and Economic Growth. Emergency Financial Managers for school districts are appointed by the Governor, subject to the advice and consent of the State Senate
New Powers for EMFs
But a bill passed by the Michigan Senate this week expands the Emergency Financial Managers' powers to include ending union-approved contracts. Holland radio station WHTC reports:
After days of debate and protests, the State Senate passes a bill to give more power to emergency financial managers appointed to cities or school districts. The 26-to-12 vote, which followed party lines, will allow emergency managers to cancel workers union contracts.
Democrats have said passing the bill would undermine collective bargaining in the affected communities or schools, while Republicans contend the legislation would help target municipalities or districts before their financial problems reach critical levels.
Six localities or school districts are currently affected by the law. From the Chicago Tribune:
The current state law related to emergency financial managers is affecting about a half-dozen local communities and schools at this time. Only Pontiac, Benton Harbor, Ecorse and the Detroit Public Schools have state-appointed emergency financial managers in place.
The bill has passed the House and the Senate and is on its way back to the House, where approval is required for some minor changes.
Nobody in Lansing was neutral yesterday when the Michigan senate completed passage of new, tougher Emergency Financial Manager legislation on a straight, party line vote.
State Senator Phil Pavlov said this is needed to maintain “vital services, such as public safety and education,” when a city or a school district is in desperate financial straits.
This reform, he said, is necessary to allow steps to be taken “to protect public interests and the public’s money and strengthen local control and accountability.” His fellow Republicans all agreed.
But if you talked to any of the Democrats, they sounded like this was the equivalent of Mussolini seizing power. “An unfair and unjustified power grab,“ Senate Minority Leader Gretchen Whitmer called it. One of her colleagues said it went way too far, “and was going to damage our communities and our schools.”
Well, you could say that it is nice to see that our time-honored tradition of bitter partisan divisions is alive and well, but I think the opposite. We’ve had four sterile years of that in Lansing. I think we’d all be better off if this could have been a bipartisan bill.
Legislation that would allow emergency financial managers to throw out union contracts and overrule elected officials in financially distressed municipalities and school districts was approved in the Senate today.
The measure passed 26-12 along party lines in the Republican-controlled chamber. Similar bills passed in the House in late February. The chambers must now agree on a final version to send to Gov. Rick Snyder for his signature. More than 1,000 union members demonstrated opposition to the bills Tuesday, chanting loudly outside the chamber doors as senators worked through details of the legislation.
The Detroit News reports the Michigan Senate is expected to pass the Emergency Financial Manager bill despite the protests taking place in the capitol. From the Detroit News:
A bill to give broad authority to emergency financial managers to fix a governing body's finances is expected to pass in the Senate on Wednesday despite boisterous union protests that punctuated today's session.
Senate Republicans voted down more than 20 Democratic amendments as more than 1,000 union members chanted "Kill the Bill" outside the Senate chamber. Their chants were audible as the chamber debated the bill, as were the catcalls of protesters crammed into the gallery above the Senate floor.
The union members protesting the bill say it would make emergency financial managers too powerful, "allowing them to toss out union contracts, overrule elected officials and dissolve city councils and school boards."
Protesters have arrived at the state Capitol to show their opposition to a measure that would give more power to Emergency Financial Managers. Laura Weber sent this report from Lansing:
The state Capitol is jammed this morning with a raucous group of union members and supporters who are opposed to a proposal to grant more power to Emergency Financial Managers. Hundreds of protesters are chanting "kill the bill" loudly outside of the Michigan Senate chamber as lawmakers prepare to vote on the controversial measure.
Still hundreds more are on the Capitol lawn rallying against the emergency manager bills. The package of bills would strip unions of collective bargaining rights, and dissolve union contracts, if an emergency manager was put in place to take over the finances of a struggling city, township, or school district.
The Associated Press reports there are around 1,000 people demonstrating:
...protesters are at the Capitol objecting to bills that would give broad new powers to emergency financial managers appointed by the state to run struggling cities and schools.
The Senate plans to vote on the measures Tuesday. The House passed the bills two weeks ago.
Groups opposed to legislation they consider anti-union are holding the morning rally and also are chanting inside the Capitol.
Local officials warned during a Monday news conference that the financial manager measures would take away voters' rights by removing the authority of elected school board members, mayors and council members.
Workers warn that the bills could allow financial managers to terminate union contracts.
Supporters of the legislation say it would lead to earlier intervention in financially troubled communities and schools, avoiding bigger crises.
Teachers, police, firefighters and other public employees plan to march on the state Capitol tomorrow.
They oppose a measure in the Senate that expands the authority of emergency managers named to run troubled local governments and school districts.
Unions say the measures strike at their bargaining rights.
Union leaders hope for a big enough turnout to persuade Senate Republicans to delay a vote.
Unions are particularly opposed to a part of the legislation that would allow emergency managers to vacate bargained contracts.
Mark Gaffney, president of the AFL-CIO of Michigan, says that’s unfair when the state is also looking to cut money for schools and local governments:
“You’re saying to a city that it’s easy to get a dictator and you’re taking money away from that city that puts you at the point where you might need him or her.”
Republicans say the measures offer local governments early help to avert a financial takeover, but once it happens, emergency managers need crisis tools to set things right.
Scott Kincaid, a member of Flint City Council, favors keeping the law and the authority it grants emergency managers.
"These bills give them unlimited authority to do certain things that, currently, we were able to solve our problems without doing those things. The system works right now, and I’ve experienced it. And it worked very well. We had financial problems in our community and we turned them around in 18 months."
Flint was placed under an emergency manager in 2002. The city recently asked the state for the authority to sell bonds to cover a $17 million budget shortfall and meet its payroll.
The state Senate is expected to vote on the emergency management bills as soon as tomorrow.
Robert Bobb, the Financial Manager of Detroit Public Schools, will stay on the job through June of this year. Bobb's contract was set to expire on Tuesday, but Governor Snyder has extended his contract.
Bobb was hired in March 2009 by then-Gov. Jennifer Granholm to fix the district's finances.
Bobb has started a number of programs to improve education and standardized test scores across the district. He also has uncovered numerous cases of theft and fraud involving district employees and vendors.
The district still faces a more that $300 million budget deficit as state per pupil funding continues to decline with the drop in enrollment.
If you had any doubts about how difficult the situation is for local governments these days, consider this. Even before they tackle the budget, our lawmakers in Lansing have been working hard on new emergency financial manager legislation.
Yesterday, the Michigan House of Representatives passed a package of bills designed to make it easier to appoint emergency financial managers to run troubled cities and school districts. The legislation also gives those managers broad new powers. The Senate is expected to easily approve this as well.
Protesters were in Lansing again today to speak out against several proposals in the Republican-controlled state Legislature that they say will strip unions of the rights. That includes a measure approved by the state House that would give more control to emergency financial managers appointed to run cities and townships, or school districts. The state Senate is considering a similar measure.
Nick Ciaramintaro is with the union AFL-CIO of Michigan. He told lawmakers that more power for emergency financial managers means less democracy for local governments.
"Kill the Bill....Kill the Bill" shouted hundreds of municipal labor union members as protests continued for a second day at the state Capitol in Lansing. Hundreds of unionized firefighters and police officers marched on the Capitol.
They are calling on the Legislature to reject a bill that would repeal the requirement that puts local government labor disputes into binding arbitration.
Local government officials say binding arbitration leads to expensive settlements. Unionized workers say binding arbitration is a fair way to settle disputes, and its a concession unions made in return for giving up the right to strike. Jason Sneft is a firefighter from the city of Jackson.
“This is probably step in a long couple years of many steps of trying to eliminate union actions.”
Drivers honked their horns in support as uniformed firefighters and police officers lined both sides of the street in front of the Capitol. The binding arbitration measure is not scheduled for a vote yet.
The House is expected to vote on another bill that would give state-appointed local emergency financial managers the power to discard union contracts.
Robert Bobb, the emergency financial manager of the Detroit Public Schools, came to Lansing yesterday to ask for something he has to know he’s probably never going to get.
He wants the legislature to give what amounts to a loan guarantee to the company that insured the schools’ last round of borrowing. If that firm, Assured Guaranty Municipal Corporation, doesn’t get that assurance, it may block the schools from borrowing more money? Why? Because it worries DPS will go bankrupt.
Which would leave Assured Guaranty holding the bag. And it’s a pretty unpleasant bag, The schools are hemorrhaging money and students. Bobb came in two years ago, full of confident promises to eliminate the deficit. But it has only gotten worse.
Assured Guaranty insured a loan for a little over a quarter of a billion dollars the schools borrowed in 2005. Now, the schools need more. They have a new deficit of $327 million dollars.
That’s more than half their entire general fund budget. To make ends meet, Bobb says he needs to borrow $219 million next month.
Robert Bobb, the financial manager of Detroit Public Schools, has asked state lawmakers to borrow funds for the school district. The Associated Press reports:
Bobb said Wednesday during an appearance before a joint session of the state Senate and House education committees that draft legislation for his plan would be submitted within about a week.
The plan would include the state helping to guarantee the school district won't go into bankruptcy. Bobb said the district does not plan to file for bankruptcy.
Bobb said the plan would not cost the state "one dime."
Bobb said the district plans to borrow more than $200 million in March. He wants his legislation approved by April 1.
Robert Bobb, the emergency financial manager of the Detroit Public Schools, will testify today at the state Capitol. He'll appear before a joint session of the state Senate and House education committees.
The Associated Press reports:
He's expected to talk about the district's turnaround plan including finances and academics. Bobb was appointed as the Detroit district's emergency financial manager by then-Gov. Jennifer Granholm in early 2009. Bobb has feuded with the elected school board over control of the district.
There was a dispute over how much power state-appointed emergency financial managers have when the Detroit School Board sued the state's Emergency Financial Manager for Detroit Public Schools, Robert Bobb.
Snyder wants the Legislature to rework the Emergency Financial Manager’s Act to provide more clarity on the powers of an emergency manager.
Robert Bobb is the emergency financial manager of the Detroit Public Schools. He says many other school districts and municipal governments are in serious financial trouble.
"There could be more in the future that an emergency financial manager should have complete authority over the operations of a school district and/or a municipality, working with their elected leadership."
Bobb says the emergency financial manager of a school district should be allowed to take over the curriculum as well as finances because, he says, money is involved in all facets of school systems. A judge denied Bobb that authority.
Bobb says he is encouraged by the governor acknowledging the issue in his State of the State speech, but Bobb says he is not clear what is being proposed, and he is anxious to hear details.
A Wayne County judge ruled last month that the Detroit school board is in charge of academics for the district, not the district’s financial manager. But both sides have to come to an agreement on how to implement the ruling, since Bobb’s team implemented several classroom reforms while the lawsuit was pending.
Anthony Adams is the school board’s president. He says it’s in the district’s best interest to keep most of Bobb’s reforms in place:
Robert Bobb, the state appointed Emergency Financial Manager of Detroit Public Schools, will stay on the job through the end of the school year. Bobb was appointed to the position by outgoing Democratic Governor Jennifer Granholm. Bobb's one-year contract ends in March.
The city of Pontiac is one step closer to shutting down its Police Department and having the Oakland County Sheriff's Office take over the city's patrols.
Pontiac faces a projected $9 million budget deficit and Michael Stampfler, Pontiac's state-appointed emergency financial manager, has asked the Oakland County Sheriff Department to take over policing the city.
A committee of the Oakland County Board of Commissioners voted 4-3 Wednesday to approve the $10-million contract. The county's Finance Committee will consider the plan today, and the full board is to vote on it Dec. 9... Undersheriff Mike McCabe said the department is expected to hire more than 60 of the Pontiac department's 70 employees and operate out of the city's headquarters in downtown Pontiac.
If approved, the Oakland County Sheriff Department would takeover on January 1st, 2011.
A state panel has named an emergency financial manager to run the city of Benton Harbor. Governor Granholm declared a financial emergency in Benton Harbor in February.
State officials say Benton Harbor's financial troubles include a deficit that has been growing by double digits. The city asked for an emergency infusion of cash from the state last month to make its payroll.
A state board named former Detroit auditor general and chief financial officer Joseph Harris to run the city, with the power to control all spending and renegotiate union contracts.
Terry Stanton is a spokesman for the state Treasury. He says drastic action is needed at times to set a city's finances right.
"The state is only as financially strong as the units within the state and, unfortunately, sometimes it's a long ways down the road before the state can step in," says Stanton.
Benton Harbor is the third city in Michigan being run by an emergency manager. The others are Pontiac and Ecorse.