Tagged: emergency manager

Governor Rick Snyder passed new laws expanding the power of Emergency Financial Managers, and there’s been debate over whether or not Emergency Managers are able to turnaround the municipalities and districts they’re assigned to.

Michigan Radio’s Jenn White spoke with Gary Olsen, Former Director of the Michigan Senate Fiscal Agency and Senior Policy Fellow at Public Sector Consultants. Here is the interview:

Do Emergency Managers leave their cities or districts in better financial condition?

As Micawber said in the Charles Dickens novel David Copperfield:

"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

The city of Ecorse ran into misery when it spent more than it was taking in.

An emergency manager appointed to oversee Ecorse's finances in late 2009 found the city was overspending. To make up for the overspending the city spent $2.4 million in revenues collected from the Ecorse Public Schools, and $4.2 million collected on behalf of Wayne County.

In 2010, a judge told the city that the money had to be repaid - a prospect that would have forced the city to raise taxes significantly and "devastated the local economy," according to Governor Snyder's office.

Now, Governor Snyder has signed legislation which supports the city in its plan to sell bonds to pay off the debt overtime.

In a press release, the Governor said:

“Ecorse didn’t get into financial trouble overnight.  Trying to undo years of mismanagement in one fell swoop would create an overwhelming burden on city residents and businesses that are already struggling,” Snyder said.  “The goal is to get Ecorse back into financial health in a responsible way.”

The Governor's office said the city could have issued bonds without state approval, but the new legislation "gives greater assurance of repayment to those who will purchase Ecorse’s bond debt."

One of the four petitions Benton Harbor City Commissioner Dennis Knowles filed to recall State Rep. Al Pscholka (R-St. Joseph) was approved by Berrien County election officials this morning.

Knowles needs to collect 6,718 valid signatures in Pscholka's district before the November 18th deadline. But the signatures are only valid for 90 days, so he has until that deadline to collect that many signatures before they expire.

The state is looking at requests to investigate the finances of two Michigan cities.

Jackson’s Mayor has asked for a state review of the city's books.  That's the first step towards the state appointing an Emergency Manager. 

Karen Dunigan says the city needs the state’s help, even though it has a balanced budget.    She says the budget covers payroll and not much else, and meanwhile, the city has $80-million in debt, with no plan to pay anything on the debt except the interest expenses. 

A group announced plans today to ask voters to repeal Michigan's Emergency Financial Manager law.  Recent changes to the law give broad powers to state appointed financial managers.  The EFM's have the authority to void union contracts and strip power from local elected governments and school districts. 

Brandon Jessup leads a group called 'The Campaign to Build Michigan'.   He says the law violates the rights of Michiganders.  Jessup says his group hopes to get approval for petition language next month.  

He says they hope to collect enough signatures to get the question put on the ballot in 2012. 

The mayor of Flint is expected to take a step this week toward asking the state to review his city's finances. It's a move that could potentially lead to a state appointed emergency manager taking over control of the city.   

The Flint Journal reported over the weekend that Mayor Dayne Walling plans to ask the Flint city council to consider requesting a state  review of the city's finances.   

 It's a move the mayor reportedly hopes will give him or the city council the power to alter city union contracts.   It could also lead to the appointment of an emergency manager.  

Less than a decade ago, Flint's finances were run by an emergency financial manager.    But recent changes in the law have given emergency managers much more power, including the ability to effectively strip  elected officials of their authority and throw out union contracts.  

Flint is struggling with a large projected budget deficit, and recently sold bonds to pay off a portion of the city's debt.