And so it begins… Benton Harbor’s EFM becomes first to invoke new powers, dissolve elected government

Invoking the powers recently bestowed upon Michigan’s emergency financial managers by the Republican legislature, Joseph L. Harris, the Granholm-appointed emergency financial manager for Benton Harbor, yesterday dissolved all elected bodies within that city. (His official order can be seen below.) This, I believe, is the first instance of an emergency financial manager exercising the bold, anti-democratic new powers afforded by Governor Rick Snyder’s Emergency Financial Manager Act.

As I believe we’ve discussed here before, Michigan did have emergency financial managers prior to the Snyder administration. If I’m not mistaken, though, they generally served in an advisory role, assisting elected officials in failing communities as they went about trying to set financial matters right.* This, however, has changed under our new Governor, who proposed that emergency financial managers be given the unprecedented power to dissolve city councils, break union contracts, and otherwise place communities under what one Republican official has called “financial martial law.” (The Snyder legislation also lowers the bar considerably when it comes to selecting those communities to have emergency financial managers imposed on them.)

It’s almost certain that the new legislation will be challenged in the courts. For the time being, though, it’s the law of the land, and, unfortunately, we’re going to start seeing other communities being forced to disband their elected governments.

Here’s the “order” issued by Harris:

efmno1b
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update: The Detroit News just posted a short article on this. Here’s a clip:

…”This is sad news for democracy in Michigan,” said Mark Gaffney, president of the Michigan AFL-CIO. “With the stripping of all power of duly elected officials in Benton Harbor… we can now see the true nature of the emergency manager system.”

Benton Harbor has struggled with a controversial trash hauling contract, lawsuits related to the contract, new competition for water services and city officials who sometimes clashed to the point that meetings dragged on for hours, Joseph said.

“I have seen for more than 30 years the mismanagement of funds and personnel in the city,” Joseph said. “Infighting has been going on for decades.”

The new powers of emergency managers include setting aside collective bargaining. Harris’ order comes before two days of training for prospective emergency managers and turnaround experts is to be held next week.

Harris, former chief financial officer for the city of Detroit, wasn’t available for comment late Friday night.

Emergency managers are in place at Detroit Public Schools and in the cities of Benton Harbor, Ecorse and Pontiac.

As we’ve discussed in the past, according to reports, as many as 170 emergency financial managers may be trained and deployed over the next year.

update: I don’t know if there are legal challenges yet, but the ACLU is looking into it.

*As it turns out, I didn’t really appreciate the full scope of the EFM program prior to the Snyder administration. While appointed EFM’s under previous administrations couldn’t dissolve local elected bodies, they were already quite powerful, and didn’t, as I suggested, just serve in an advisory capacity. With more on that, I’d suggest that you read my friend Murph’s correction in the comments section. As he states, “Old-style EFMs had the ability to sell municipal assets, implement layoffs, amend the local budget without elected officials’ approval, hire people to fill vacant staff positions, create new positions and staff them, eliminate departments within the city government, contract with adjacent communities or private entities for services, etc.” (It should also be noted that, while these EFMs under Granholm did have significant power, there were, until recently, very few of them. We expect to see an incredible increase not only in number, but in terms of their reach under Snyder.)

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27 Comments

  1. LaidOffTeacherPatti
    Posted April 16, 2011 at 8:13 am | Permalink

    In my pink slip (which is neither pink nor a slip–discuss amongst yourselves), Rob Bobb made it clear that come May 17, he will be changing parts of our contract. To his credit, he didn’t say “nah nah nah nah” and talk about how he’ll make paper hats out of it but the idea is out there. I’m sure I’ll bitch about it on FB so you’ll be the first to know after me.

  2. Posted April 16, 2011 at 8:53 am | Permalink

    I don’t understand how any Republican could philosophically ever get behind this.

    I mean, I do, but I don’t.

  3. Robert
    Posted April 16, 2011 at 9:38 am | Permalink

    So now were getting our Czars for real, not just in name like the ones the Teabaggers where complaining about a few months back.

  4. Edward
    Posted April 16, 2011 at 9:46 am | Permalink

    The Michigan Messenger has a short story this morning. It includes the following, which might explain Patti’s pink slip.

    Harris’ move comes as Detroit Public Schools’ emergency financial manager Robert Bobb announced that he would use powers granted to him under the act to change union contracts.

    http://michiganmessenger.com/48278/benton-harbor-emergency-manager-strips-power-from-all-elected-officials

  5. Edward
    Posted April 16, 2011 at 9:46 am | Permalink

    Here’s more:

    “I fully intend to use the authority that was granted,” Bobb said, referring to a new law that gives emergency managers the authority to modify — or terminate — collective bargaining agreements. It was the first time Bobb had publicly indicated he intends to use the expanded authority.

    His statement came as the district announced Thursday it is sending layoff notices to all 5,466 members of the Detroit Federation of Teachers and non-renewal notices to 248 administrators.

    http://michiganmessenger.com/48258/bobb-will-use-new-powers-to-alter-union-contracts

  6. Kim
    Posted April 16, 2011 at 9:59 am | Permalink

    Isn’t this the party that’s supposed to hate “big government”?

  7. Posted April 16, 2011 at 11:06 am | Permalink

    As I believe we’ve discussed here before, Michigan did have emergency financial managers prior to the Snyder administration. If I’m not mistaken, though, they generally served in an advisory role, assisting elected officials in failing communities as they went about trying to set financial matters right.

    This is incorrect. Under PA 72 of 1990, EFMs had substantial unilateral authority over budgetary matters, and were by no means “advisory”. The legislation earlier this year added to and expanded those powers, for example allowing the EFM not just to open union contracts for re-negotiation, but to outright change them.

    Old-style EFMs had the ability to sell municipal assets, implement layoffs, amend the local budget without elected officials’ approval, hire people to fill vacant staff positions, create new positions and staff them, eliminate departments within the city government, contract with adjacent communities or private entities for services, etc.

    The EFM’s role has been a sort of administrative alternative to bankruptcy, and so has, since being created in 1990, had fairly broad abilities to hire, fire, sell assets, outsource, and perform other activities that we might expect out of a bankruptcy (on the grounds that the State created the local government, and so could go in and clean house itself, rather than letting the courts do it).

    From a State of Michigan document on the old EFM law (Act 72 of 1990):

    Do Emergency Financial Managers have the authority to hire staff?

    Yes. In addition to staff otherwise authorized by law, an Emergency Financial Manager, with the approval of the Local Emergency Financial Assistance Loan Board, may appoint additional staff and secure professional assistance considered necessary. The Emergency Financial Manager has the authority to create new positions, and complete authority to fill any vacancy in a permanent position by any appointing authority of the unit of local government.

    Does an Emergency Financial Manager have the authority to direct existing staff?

    Yes. Pursuant to Section 19 of the Act, an Emergency Financial Manager may issue to officials or employees of the unit of local government any orders which the Emergency Financial Manager considers necessary to accomplish the purposes of the Act, including, but not limited to, orders for the timely and satisfactory implementation of a financial plan. An order issued by an Emergency Financial Manager is binding on officials or employees of the unit of local government to whom it is issued.

    Does the Emergency Financial Manager need public approval for a financial plan?

    No. Section 20 of the Act provides that “[i]n consultation with” officials of the unit of local government, an Emergency Financial Manager shall develop, and may from time to time amend a written financial plan for the unit of local government. The financial plan implemented by the Emergency Financial Manager must contain information for each year during which the financial plan is in effect.

    May the Emergency Financial Manager amend the budget of the unit of local government without the approval of the local legislative body or chief executive officer?

    Yes. An Emergency Financial Manager may amend, revise, approve, or disapprove the budget of the unit of local government, and limit the total amount appropriated or expended during the balance of the financial emergency.

    Does an Emergency Financial Manager have the authority to eliminate a department or transfer functions of one department to another, or eliminate positions?

    Yes. Notwithstanding the provisions of any charter to the contrary, an Emergency Financial Manager may consolidate departments of a unit of local government, or transfer functions from one department to another department, and may appoint, supervise, and, at his or her discretion, remove heads of departments other than elected officials, the clerk of the unit of local government, or any ombudsman position in the unit of local government.

    Does an Emergency Financial Manager have the authority to enter into contracts with other units of local government for services?

    Yes.

    Does an Emergency Financial Manager have the authority to sell assets of a unit of local government?

    Yes. An Emergency Financial Manager may, except as restricted by charter or otherwise, sell or otherwise use the assets of a unit of local government to meet past or current obligations, provided that the use of the assets for this purpose does not endanger the public health, safety, or welfare of residents of the unit of local government.

  8. Posted April 16, 2011 at 11:30 am | Permalink

    Somewhat relatedly, MML notes that the House’s Appropriations Subcommittee on General Government Operations passed specific language regarding revenue sharing earlier this week.

    MML opposes all reductions to revenue sharing, but they make one important specific note about the difference between the House’s proposal and Governor Snyder’s. Both the Governor’s proposal and the House’s called for local communities to develop plans discussing how service sharing among communities might save money, with “good faith estimates” of potential cost savings. While the Governor’s at least implied that actions already taken could be recognized in these plans, MML notes of the House proposal,

    The requirement that local communities must produce plans to cooperate and consolidate services does NOT include any past efforts at consolidation and cooperation and ONLY references future efforts in that regard.

    The specific language from the House is, empahsis mine,

    (b) Each eligible city, village, and township shall develop plans to increase its existing level of cooperation, collaboration, and consolidation, both internally and with neighboring jurisdictions. … Plans shall make a good-faith effort to estimate potential savings and costs associated with cooperating, collaborating, and consolidating at the local level. Each eligible city, village, and township that completes the cooperation, collaboration, and consolidation plan by January 1, 2012, shall receive 1/3 of its available distribution under this subsection.

    Now, you’ll note that still there’s no metric proposed for how “good” a plan is – just whether or not it exists. We’ll probably have to wait for next year’s budget for that shoe to drop, and for the legislature to tie revenue sharing to implementation of a plan.

    The concern remains that cities like Ypsilanti, which have already done a lot of consolidation and cooperation, won’t have as much available for future actions, and if this turns into a simple checklist of items done moving forward, we won’t “score” as well, because we’re already a lot further into our checklist than many communities.

  9. Posted April 16, 2011 at 12:05 pm | Permalink

    Schimmel came into Hamtramck and told the council that they shouldn’t bother to meet anymore. They eventually started meeting again and began to challenge his powers. He tried unilaterally changing union contracts, but the firefighters’ union defeated him in arbitration. In the latest round, Hamtramck officials have been lying to the state about union negotiations and the need for an EFM with broader powers. This bill addressed all those perceived problems.

  10. LaidOffTeacherPatti
    Posted April 16, 2011 at 12:54 pm | Permalink

    Edward, yep, my principal said he got his lay off last week. I’m guessing that Bobb will do away with seniority which actually would help me since this is my “second career” and I only have 4 years with this particular district (2 elsewhere). But then what? Does everyone reinterview? I’m guessing he will also probably do away with pay increases (steps, as they are called) and possibly the extra pay for advanced degrees. Don’t know if he will take away planning periods and such…I’m not sure how deep he wants to go. All I can say is that when the non-teachers all get laid off (as they will be after April 30), someone is bound to blow and I just hope that innocent people don’t get hurt. Or hell maybe some teacher or principal is already out there, steaming up….

  11. Posted April 16, 2011 at 2:23 pm | Permalink

    Murph, I’m sorry about understating the powers of the EFMs under Granholm. I will note it in the post and link to your correction. Thanks.

  12. Bob
    Posted April 16, 2011 at 2:34 pm | Permalink

    Peter’s point is well taken, no Republican or Libertarian thinking person should support Snyder or actions like this. The problem is, most of them have a tendency to despise cities like Ypsi and Detroit. They don’t give a damn about the people who live or go to school in those towns. It will take a long time for the effects of these kinds of policies to make their way out to Brooklyn or Adrian, rural areas that are strongholds for Tea Party thinking. This is a huge story, or should be. Nobody who believes in democracy, regardless of party affiliation, should tolerate this crap. Fundamentally un-American in every way.

  13. Posted April 16, 2011 at 3:38 pm | Permalink

    I don’t think it’s at all coincidental that this starts in Benton Harbor, a city that is overwhelmingly African-American and poor. The American right has historically exhibited a consistent pattern of condescension and hypocrisy in regards to minority and poor communities, restricting the democratic rights of the poor, while demanding the right of self-determination for themselves.

    I think it is disgusting that Republicans (or anyone else) would support this removal of elected bodies from power, but it is even more disgusting that no one from the right appears to be stepping up in outrage.

  14. LaidOffTeacherPatti
    Posted April 16, 2011 at 4:43 pm | Permalink

    Bob, I agree but I’d like to take it a step further and say that they despise those city because of the race of the folks living in those cities. Not an income thing–as you said, this won’t crawl down to Adrian or wherever any time soon (and I went to college in Adrian so I know of what I speak–but a race thing, pure and simple.

  15. wetdolphinmissile
    Posted April 16, 2011 at 6:07 pm | Permalink

    so because we have been on the fucking bandwagon already w/ cooperation…we are now screwed cuz we need more cooperation. This reminds me of the NCLB…MI kept records and so went in deeper sooner than other states. No good deed goes unpunished.

  16. Posted April 16, 2011 at 7:48 pm | Permalink

    I didn’t want to bring up race in my post, but, since you brought it up, Pete, I do think it’s troubling, and so do others. I just read the following at Electablog:

    ….Interesting statistic: Benton Harbor is 92.4% African American with an annual median household income of $17,471 with 42.6% of the population below the poverty line. St. Joseph, the next city south of Benton Harbor on the shores of Lake Michigan and just on the other side of the Paw Paw River is 90.3% white with an annual median household income of $37,032…

    Of course Tea Baggers will say that race can’t be an issue as Harris is black.

  17. Bob
    Posted April 16, 2011 at 9:10 pm | Permalink

    Patti, I actually meant race too. I was trying to say so in a subtle manner, too subtle perhaps. I grew up not far from Adrian and race is one of the major subtexts of the Tea Party movement. It’s not the only issue, and I don’t believe partiers are all racists, but it’s a huge element.

  18. LaidOffTeacherPatti
    Posted April 16, 2011 at 11:45 pm | Permalink

    Bob, again, agreed…not all Tea Baggers are racist but yep, it’s totally present in their movement. Let me say this about Adrian…I had two girlfriends who were black (there weren’t a lot of blacks on campus) and the three of us went to Meijers late one night. This guy walked by and–no shit–said, “N—–lover” to me. This was in about 1991 or 1992 but I can’t think attitudes have changed that much. Also a lot of racism towards the migrant workers in town.

  19. Posted April 17, 2011 at 6:31 am | Permalink

    I lived in Adrian from 2001-2008. I don’t think there is any more racism in Adrian than in other parts of Michigan, but then I consider Michigan to be a very racist area.

  20. Robert
    Posted April 17, 2011 at 8:56 am | Permalink

    I am shocked Patti! Adrian has a Meijers?!

  21. Posted April 17, 2011 at 1:59 pm | Permalink

    They’ve had one for the past 30 or 40 years.

    Adrian has the same population as Ypsi.

  22. Bob
    Posted April 17, 2011 at 2:45 pm | Permalink

    Adrian also has good thrift stores and one of the best weekend farmers markets around.

  23. Posted April 17, 2011 at 2:52 pm | Permalink

    That’s totally true. The farmer’s market in Adrian is vastly superior to any other I’ve been to in SE Michigan.

  24. Heidi
    Posted April 18, 2011 at 9:10 am | Permalink

    I live pretty close to Adrian (Tecumseh) now, and they are one of the cities on the distressed list that might be facing an EFM soon. Agreed that that area is pretty racist (it’s been a culture shock after living in Ypsi for so long), but with that being said, Adrian does have a pretty significant Hispanic population. Even Tecumseh, at my son’s kindergarten round up on Saturday had a Spanish speaking translator, which was pretty amazing to me that the schools there would be so culturally sensitive. (Thank goodness!)

  25. Glen S.
    Posted April 19, 2011 at 9:00 am | Permalink

    Local (Ann Arbor) blogger Chris Savage, of “eclectablog,” has been doing some really great reporting on the occupation of Benton Harbor — including a post today that explains why Benton Harbor may have been chosen to pilot the new law based on reasons other than strictly its financial condition.

    The post also provides links to some of of the area’s local news coverage, including a video clip highlighting residents’ reactions to the new EFM during the most recent BH City Commission meeting.

    http://www.eclectablog.com/2011/04/mi-gov-rick-snyders-takeover-of-benton.html

  26. Marcy
    Posted April 19, 2011 at 7:06 pm | Permalink

    Here’s a great article on the motivation behind Benton Harbor’s takeover:

    http://www.dailykos.com/story/2011/04/19/968278/-MI-Gov-Rick-Snyders-takeover-of-Benton-Harbor-tied-to-shoreline-developmentwhat-Rachel-missed

  27. Glen S.
    Posted May 4, 2011 at 10:14 am | Permalink

    Reports are that the Benton Harbor City Commission is continuing to meet and do business, despite an “order” by the State-appointed “Emergency Manager,” that claims to prohibit them from doing so. Apparently, one of their first orders of business was to declare the State takeover of their city “unconstitutional.” That is, until their new EM got wind of it …

    According to a local radio station, WSJM:

    “Benton Harbor Emergency Manager Joseph Harris tells us that he plans to issue an order rescinding this week’s city commission vote on a resolution to declare Michigan’s emergency manager law unconstitutional. Harris says that the vote has no legal validity, and notes that it was in violation of his directive to the commission that it may not vote on anything, other than to open and close meetings, and approve minutes. He tells us that he has not decided to go as far as lock the commissioners out of city hall, but he will send them a cease and desist order regarding further votes on such resolutions.”

    How gracious of unelected bureaucrat Joseph Harris that he has SO FAR decided not to lock the City’s legal, rightful and democratically-elected officials out of their own City Hall.

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