Flint, Mich.—In November, Flint was placed under the control of an emergency manager for the second time. This time is different, because under a law passed in March of last year the financial manager can end collective bargaining agreements (with state approval), run up debt, increase property taxes and sell property.
The first time around Flint was put under the control of an emergency financial manager. The word “financial” is dropped from the new law because the powers of the manager are much broader than finances. (See “Vetoing city elections,” May-June 2011 N&L.) The emergency manager has a contract that requires the City of Flint to pay him $170,000 per year.
It is too early to tell if the manager will break collective bargaining agreements. The experience of Pontiac, a smaller city 35 miles south, may be instructive.
The manager there received state approval to end the collective bargaining agreement for 11 police dispatchers last June. Last month, the Pontiac manager listed city property for sale, including five fire stations, two cemeteries, two landfills, 11 water pumping stations, the public library and the police station. The police department has been abolished and the city has contracted with the Oakland County Sheriff for police protection. The manager plans to increase property taxes by 5.4 mills to fund police and fire pension and healthcare funds, and possibly to raise taxes more this year to compensate General Motors for “overpaying” its taxes. The Pontiac manager’s contract requires the City of Pontiac to pay him $150,000 per year.
Detroit, which the state is reviewing for possible appointment of an emergency manager, is trying to cut $330 million from a $1.2 billion budget. The Detroit public schools system already has an emergency manager.
The small cities of Benton Harbor and Ecorse also have emergency managers who are each paid $132,000 per year from what is left of their city’s money. Except for Ecorse, all of the cities in question, Detroit, Flint, Pontiac, and Benton Harbor, have majority African-American populations.
There has been plenty of protest, from public employee unions and others. A lawsuit was filed on behalf of 28 residents and there is an active effort to overturn the emergency manager law. The real problem is not, for the most part, that the local governments have been mismanaged, it is that they are poverty stricken. The state has cut business taxes by 86%, which has had an impact on school financing. Racing to the bottom is not an answer. There was a time when “reform” meant improving the lives of people. The inability of capitalism to reform itself is clearer every time a new crisis emerges.