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Michigan To Appoint Emergency Manager For Detroit

Detroit’s financial situation has gotten so bad that the State of Michigan is stepping in to take over city operations:

DETROIT — Gov. Rick Snyder of Michigan announced on Friday that the city of Detroit is so snarled in financial woes that the state must appoint an emergency manager to lead it out of disaster.

“There is probably no city that is more financially challenged in the entire United States. If you look at the quality of services for citizens it’s ranked among the worst. So we went from the top to the bottom over the last 50 or 60 years,” Mr. Snyder told Detroiters in a town-hall-style meeting that was broadcast live on local television stations across the city.

“It’s time to say we should stop going downhill,” he said. “There have been many good people that have had many plans, many attempts to turn this around, they haven’t worked. The way I view it, today is a day to call all hands on deck.”

The state-appointed manager, who could be selected later this month, would ultimately wield powers aimed at swiftly turning around the municipal government’s dire circumstances — powers to cut city spending, change contracts with labor unions, merge or eliminate city departments, urge the sale of city assets and even, if all else failed, to recommend bankruptcy proceedings.

After a state report that Detroit is carrying more than $14 billion in long-term liabilities and experiencing nearly annual projections of cash shortfalls, the decision was years — perhaps decades — in the making. Still, it set off a range of pointed, emotional reactions here about whether this was the first step toward true repair in a city that was once the nation’s fourth largest or one last very public sign of a city crumbling.

Some elected city leaders have widely criticized the notion of an outside manager as a takeover of their city and an affront to democratic principles, and they were expected to protest the governor’s decision. Under Michigan law, city officials have 10 days in which to seek reconsideration by the governor, as well as the possibility for a legal appeal in the courts after that. The decision comes during an election year for the mayor and City Council here, and even before Mr. Snyder’s formal announcement on Friday, members of the City Council had been mulling legal options, including the possibility of hiring outside lawyers to block the move

While the State of Michigan has sent in managers to solve crises in other smaller cities over many years, the move is politically fraught in Detroit, the state’s largest city and a mostly black city dominated by Democrats in a mostly white state where the capital is now controlled by Republicans, including Mr. Snyder.

Some political experts in Michigan have speculated that Mr. Snyder will choose a financial expert who is African-American in an effort to calm racial dimensions of the move in a city that is 83 percent black. Mr. Snyder said he has a top candidate for the job — someone he declined to name on Friday — to recommend to a three-person state panel that will make the appointment.

Leaders of the local N.A.A.C.P. in Detroit vehemently denounced the notion. “This is anti-democratic, not needed, and it’s against everything that this nation was founded upon,” the Rev. Wendell Anthony, president of the local chapter, said in an interview. “For one individual to be able to wipe out the duties of our duly-elected officials, that’s more or less a dictatorship and it’s against everything that America is supposed to be about.”

Mr. Anthony added that the State of Michigan might want to consider whether it really wants to take on the difficult troubles of a city where residents have complained bitterly about darkened streetlights, slow response times by police officers and delayed buses even as city coffers are drained. “If you come into Detroit,” Mr. Anthony said, “you own Detroit. You own education. You own police and fire. You own public lighting.”

Some business leaders, however, said they welcomed the prospect of a state-appointed manager. Even as the city has wrestled with a shrinking population and tax base and shortfalls in the budget to pay for public services, there are signs of growth in the private sector, and some business leaders say the city’s financial tangle has become the one remaining factor still holding back Detroit.

“Our motto has been, ‘bring it on,’” Sandy K. Baruah, chairman of the Detroit Regional Chamber of Commerce, said of an outside manager. “This sends a positive message to business that Detroit is fixing its problems.”

Snyder has been criticized in the past for using this particular power granted him under state law to essentially step in and sweep the elected leaders of a locality aside, and I’m sure that we’ll hear some of the same kind of criticism now. At the same time, though Detroit’s fiscal and economic problems are the stuff of legend at this point and, politically, the city has been a mess for decades. Indeed, the city’s last Mayor is currently serving prison term after being convicted of multiple counts of corruption. In the end, cities and municipalities are subordinate to the state and, in Michigan’s case, it would simply be insane for the state to sit back and do nothing while the state’s largest city sinks further into the sewer. Before this announcement, it was being reported that city officials were contemplating putting Detroit through Chapter 9 Bankruptcy. If that’s not an indictment of their own competence, I don’t know what is. Perhaps it’s time for someone who knows what they’re doing to take charge.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Franklin says:

    I have to say that it’s both undemocratic and necessary. It’s undemocratic not only because the city leaders are elected, but because Michigan voters struck down one version of the emergency manager law just this November. But it is also necessary because … well it’s pretty f**king obvious that it is necessary.

    Like or Dislike: Thumb up 3 Thumb down 1

  2. wr says:

    @Franklin: “But it is also necessary because … well it’s pretty f**king obvious that it is necessary.”

    Yes, that’s why it says in the constitution that our leaders should be chosen by a vote of the people until things gets hard, then we must appoint business-approved dictators.

    Like or Dislike: Thumb up 11 Thumb down 0

  3. becca says:

    I have suspected for some time that TPTB have soured on democratic governance and so the GOP.

    Paul Weyrich has said publicly that conservatives do not want people to vote. That was several years ago. Certainly, only a fool couldn’t see that the conservative movement and the GOP have done everything they can to damage government institutions, in office or out for decades now.

    I think Robert S Kaplan in The Coming Anarchy (1994) got the future right, but totally neo- liberalled out on the cause. But nations are crumbling and borders are blurring all over the world and Detroit is a victim, too, of the disastrously implemented Neoliberal agenda.

    Like or Dislike: Thumb up 3 Thumb down 0

  4. Gromitt Gunn says:

    Let me just pre-empt TN:

    irony is lost! Europe west secularization! Stockdale, CA! Liberal-academe-media cabal! I forgot my meds! Democrats are the real racists! Boston is a cesspit! I really, really, really did pass the bar, guys! Really!

    Like or Dislike: Thumb up 5 Thumb down 2

  5. Franklin says:

    @wr: I hear ya, but to play devil’s advocate: Michigan *did* elect Snyder and the Republican-controlled state government. If you’re talking about the U.S. Constitution, it only discusses state vs. federal powers, not city vs. state. I have no idea if the latter is covered by the Michigan Constitution.

    Like or Dislike: Thumb up 1 Thumb down 0

  6. Gromitt Gunn says:

    In all serious, this is incredibly sad. I read a few years ago about a proposal to buy out residents of some mostly-abandoned areas, cut off all services to those areas, and then basically let them revert to nature. As far as I can recall, it didn’t go anywhere but frankly it sounds better than letting whole neighborhoods descend into a very expensive state of decay.

    Like or Dislike: Thumb up 4 Thumb down 0

  7. Mikey says:

    @wr:

    Snyder isn’t appointing an EFM because he’s a “dictator,” he’s appointing one because the City Council has proven, again and again and again and again, that it is incompetent, hopelessly corrupt, and incapable of solving the city’s problems on its own.

    Like or Dislike: Thumb up 3 Thumb down 1

  8. John Burgess says:

    @wr: Yeah… too bad Michigan voters ended up supporting a law that allows the governor to do that, isn’t it. Must have been mob rule or sumpthin.

    Like or Dislike: Thumb up 2 Thumb down 0

  9. Tsar Nicholas says:

    Meh. This is nothing. Just wait until inflation takes root. Just wait until interest rates inevitably reverse course and spike. Imagine the fiscal deficit scenarios for the likes of Detroit when debt service payments are 300-500 bps or more higher? (gulp)

    Plus this merely is the tip of the iceberg. Detroit is not the only big liberal Democrat city that’s been controlled for decades by liberal Democrats. There’s also Philly. Newark, Camden, Jersey City and Patterson. Baltimore. New Orleans.

    Hell, in California alone three separate major municipalities as we speak are insolvent or literally bankrupt and many more are headed down that same path. And when the next recession happens (it might already be happening, BTW) things will get that much worse.

    If the U.S. were a company it would be taken into receivership and liquidated.

    Like or Dislike: Thumb up 2 Thumb down 3

  10. bill says:

    @Gromitt Gunn: mayor bing supported that too, it made a lot of sense so it was doomed from the get go. there’s just not enough tax payers to fit the bills anymore, but greed get’s in the way of real progress.

    Like or Dislike: Thumb up 1 Thumb down 0

  11. grumpy realist says:

    Given the messiness we have with state and city pension plans, we’re going to have to have the equivalent of Chapter 7 for both of them. No Chapter 11, please. It just drags the bleeding out further (witness the number of airline companies who have gone in and out of Chapter 11 like a revolving door.)

    Like or Dislike: Thumb up 0 Thumb down 0

  12. wr says:

    @Mikey: “Snyder isn’t appointing an EFM because he’s a “dictator,” he’s appointing one because the City Council has proven, again and again and again and again, that it is incompetent, hopelessly corrupt, and incapable of solving the city’s problems on its own.”

    Right. Because in saying that, he proves he’s completely different from any other dictator who has seized power from a democratically elected government. Those guys always say “I’m doing this so I can have lots and lots of power!!!” That’s how we can tell a dictator apart from a noble, freedom lover like Snyder.

    Besides, it’s just those people who have proven themselves unworthy of self-government. It’s not like he’s disenfranchising white good people or anything.

    Like or Dislike: Thumb up 3 Thumb down 2

  13. wr says:

    @John Burgess: “Yeah… too bad Michigan voters ended up supporting a law that allows the governor to do that, isn’t it. Must have been mob rule or sumpthin.”

    Not mob rule — dictatorial rule. The Republican state congress passed an emergency manager law. The people of the state put that law on the ballot and voted it down in a referendum. So the Republicans (led by Snyder) passed a new version that was explicitly immune from public referendum.

    So this was done in direct contravention of the will of the majority of voters of the state.

    http://www.mlive.com/politics/index.ssf/2012/12/replacement_emergency_manager.html

    So nice snark in favor of this dictatorial power grab… but you are completely wrong.

    Like or Dislike: Thumb up 3 Thumb down 2

  14. wr says:

    @grumpy realist: “Given the messiness we have with state and city pension plans, we’re going to have to have the equivalent of Chapter 7 for both of them.”

    And what do you do about the thousands of retirees after you’ve stolen the only retirement benefits they have? You know, the ones they negotiated in good faith?

    Why is it that a contract is a sacred trust when we’re talking about GM bondholders taking a haircut, but just worthless paper when it comes to beggaring the middle class?

    Oh, right. The bondholders are rich. So they deserve it all.

    Like or Dislike: Thumb up 6 Thumb down 2

  15. Mikey says:

    @wr:

    I grew up in the Detroit area, worked in Detroit, and watched the City Council take the place straight down the shitter. They DO NOT deserve to govern. They have failed, miserably and totally, in every aspect.

    If you’re from Detroit, I feel for you. I wish the EFM hadn’t been necessary. But what else was to be done, after so many years of decline, which the existing city government was either powerless to stop or actively enabling through corruption?

    Like or Dislike: Thumb up 2 Thumb down 1

  16. wr says:

    @Mikey: “I grew up in the Detroit area, worked in Detroit, and watched the City Council take the place straight down the shitter. They DO NOT deserve to govern.”

    Yeah, well that’s what I thought when I watched our previoius president lie us into war and destroy our economy. But you know what? The majority of the people voted for him, so he got to govern. We don’t respect the will of the electorate except when you disagree.

    I’m not from Detroit, by the way. Never been there. But this isn’t a third world dictator where one political party can seize all power and hand it off to their buddies whenever they want to. That’s what the Republicans in Michigan have done. And if you think this is going to improve the lot of the people living in Detroit — as opposed to lining the pockets of Snyder’s corporate bosses — you haven’t been paying attention.

    Like or Dislike: Thumb up 3 Thumb down 1

  17. 11B40 says:

    Greetings:

    My compassion has been aroused. Where can I send my check ???/I had no idea that things were this bad in Detroit. I drove through the place back in the early ’80s, going from Chicago to Schnectady, and the place looked okay to me. Plus, don’t they have a basketball playing mayor somewhat akin to our President ???

    And that Governor lady who looked so pretty ??? What party was she a member of again ???

    Like or Dislike: Thumb up 2 Thumb down 1

  18. Woody says:

    The city of Detroit has suffered several enormous economic blows – some self-inflicted, some more national in origin.

    Sorry, the Snyder/Michigan GOP takeover has no place in a democracy. If the City Council stinks, then it is the responsibility of the citizens to join together and vote them out of office. Rick Snyder and his cronies don’t live there – like all feudal lords, their castles lie many leagues away, and their personal life will be blissfully unaffected by the “tough love” inflicted by their appointed Sheriff of Nottingham.

    Look, a democracy (or republic) isn’t designed to be friction-free. I suggest those of you looking for that form of government to join Dennis Rodman on his travels.

    Like or Dislike: Thumb up 6 Thumb down 1

  19. bill says:

    well bing has 10 days to appeal but i doubt if he will- nobody wants the job of telling everyone that they’re going to pay more taxes, get less services and if you were expecting a nice city pension…..not happening. i’d say turn off the lights on the way out but i think they’re already off.

    Like or Dislike: Thumb up 0 Thumb down 1

  20. bill says:

    @Woody: the citizens have been voting for this for decades, that’s the problem. they can’t vote to print more money, unlike their hero in dc.

    Like or Dislike: Thumb up 2 Thumb down 2

  21. Moosebreath says:

    This situation in Michigan is why I always find it funny when 2nd Amendment types talk about taking up arms to protect democracy. This is about as obvious a case of democracy being under seige as we have had in this country in my lifetime, with a properly elected mayor and council being ordered to stand aside and surrender their powers to a person who never stood for election.

    And yet the same people who loudly protest how they need their guns to protect against tyranny will all be loudly applauding this move. This is a far better reason to believe irony is dead than any of the hundreds of examples TN has pointed out over the last few months.

    Like or Dislike: Thumb up 5 Thumb down 0

  22. Mikey says:

    @wr:

    I’m not from Detroit, by the way. Never been there.

    Well, then, with respect–you don’t have the full picture. I’m not saying that to be snarky, I’m saying it as someone who grew up there and whose entire family, save one of my four brothers, still lives there. I don’t think most Americans really understand how bad it is.

    The “E” in “EFM” stands for “Emergency.” If there’s a better word to describe Detroit’s financial situation, I don’t know what it is.

    I understand your distaste for this–I agree with you that it’s fundamentally undemocratic. But the alternative is worse.

    Like or Dislike: Thumb up 2 Thumb down 1

  23. Tyrell says:

    A lot of Detroit’s problems are caused by the crime culture that controls the city. Get gang members, career criminals, and violent felons out of the city with a warning not to come back. Once the city is cleaned up, new people, business, and technology industries will come in. Think: why have businesses, corporations, and law abiding citizens left?

    Like or Dislike: Thumb up 0 Thumb down 2

  24. superdestroyer says:

    I find it very humorous that all of the progressives who endlessly write about how smart and brilliant Democrats are and that all of the stupid people are in the Republican Party now are writing that the Democrats should be allowed to be as stupid as they want to be and there is nothing that anyone else should do about it.

    What recourse does the state and federal government if a local government it not only totally corrupt but incompetent. I find it odd all of the progressives who have zero problem with nationalized health care, nationalizing educational standards, and who love Robin Hood Laws, now are great supporters of local political control. If a state government can force all public schools to the same level of mediocrity, then it can take over local governments that cannot govern.

    Like or Dislike: Thumb up 0 Thumb down 4

  25. Franklin says:

    @Mikey: I agree with you – basically what I said in the first post. I’ve got to believe this is going to make things better, and not only that I think Bing has an opportunity here. He’s the only one in city gov’t who I have any faith in. By working with the EFM he can finally get some stuff done with the power to bypass the corrupt City Council.

    To be honest, how much of City Council was “democratically” elected? I wouldn’t be too surprised if their paid-off cronies made sure the right ballots got stuffed.

    Like or Dislike: Thumb up 1 Thumb down 1

  26. Franklin says:

    I think a lot of these comments are way overblown. City government failed: they are bankrupt. The EFM law is just a form of receivership.

    Yes it is undemocratic but not completely so. The state government that created the law and the governor executing it were democratically elected. It’s simply not the end of democracy as we know it. Don’t believe me? Just ask Jennifer Granholm who appointed several managers.

    Like or Dislike: Thumb up 1 Thumb down 1

  27. LaMont says:

    In a city that prospered and failed with the big three, its very funny to read comments that cast blame on city councel or the mayor. It is simple and lazy to argue that the catastrophy that was 60 years in the making is mainly the fault of Detroit’s political leaders. With just a little research, you’d fine that what is happening in Detroit is the culmination of the perfect storm involving greed, power trips, loss of resources, racial and social tension, intentional sabatoge (external and from within), and the lack of cooperation between the state and local government on a scale that is likely unmatched in any other major city. Sounds a lot like what is going on in Washington doesn’t it?

    In essence, Detroit is no different than what is going on at the federal level. Detroit did not magically fall into financial abyss by over-extending itself! Detroit arrived at that state by measures, taken well before city counsel were thought to be “incompetent”, that undermined Detroit’s continued potential for success.

    And no, a financial manager is not the solution. If Obama had the unmitigated power to appoint a financial czar to address the $16 trillion dollar national debt many of you would go nuts as there would be no checks and balances and congress would be rendered useless. Furthermore, it is usually not in the job description of the financial manager to find ways to increase revenue (which involves investments – yes, spending), a very important factor in any city’s ability to attract revenue through economic activity.

    Like or Dislike: Thumb up 3 Thumb down 0

  28. LaMont says:

    @Tyrell:

    Never mind the fact that I totally disagree with this premise…

    What you stated is a symptom, not the cause!

    Like or Dislike: Thumb up 0 Thumb down 0

  29. Liberty60 says:

    @Moosebreath:
    My thoughts as well-
    Tyranny always enters to thunderous applause.

    In almost any case of a dictatorship, it is presented as the “cure” for chaos and lawlessness, which not coincidentally, is the same rationale as the gun culture of Wayne La Pierre.

    Like or Dislike: Thumb up 2 Thumb down 0

  30. JKB says:

    I guess there is a reason to understand the American form of governance when things start falling apart. When it is all running smoothly there is little concern over the underlying mechanics but when repairs are needed, suddenly a grasp of reality is needed.

    While the particulars depend on the Michigan constitution, cities are chartered or incorporated and do not have sovereignty independent of the state that grants their charter. Their police powers are delegations from the State. As is their ability to issue debt and levy taxes. In short, a city is far more like the much hated corporation than a sovereign entity such as the State.

    As the State granted the charter for the city to form, so can it revoke that charter when the city cannot maintain itself as an ongoing enterprise, or as in this case, appoint an emergency manager to either correct the problems or take the city into bankruptcy.

    Like or Dislike: Thumb up 0 Thumb down 0

  31. LaMont says:

    @JKB:

    The fact of the matter is that the state and city are NOT a corporation. The state has elected officials just as well as the city. And federal law, which supercedes local law, dictates that no one’s right to vote should be disenfranchised.

    Like or Dislike: Thumb up 1 Thumb down 0

  32. JKB says:

    @LaMont:

    As I said, when things start falling apart, you have to deal with the underlying reality of how cities are permitted to form and how they are managed, or even dissolved by the State, the sovereign entity that controls the territory.

    The people of Detroit had the chance to exercise their vote to pull Detroit back from the edge. They chose poorly. Now the superior sovereign is going to try.

    Fact is, cities rise, cities fall. There is no reason once the economic reason for Detroit has left, that Detroit doesn’t simply fade away.

    Like or Dislike: Thumb up 0 Thumb down 1

  33. LaMont says:

    @JKB:

    And like I said, federal law dictates that no one’s right to vote is disenfranchised. You don’t get to break the constitution when it is convenient to do so. If that means bankruptcy than so be it. It does not matter that the state “controls” the territory. A solution should not require individual’s rights to be compromised.

    The people of Detroit had the chance to exercise their vote to pull Detroit back from the edge. They chose poorly.

    At some point, it did not matter who the people of Detroit voted for. Detroit became a sinking ship way before it’s political leaders, dating back to Coleman Young, could do anything about it.

    Like or Dislike: Thumb up 1 Thumb down 0