Flint, Mich.– Michigan has a new emergency financial manager law that threatens the very existence of local governments and of collective bargaining agreements. This law, effective March 16, is the direct result of the election of a Republican governor, Rick Snyder, and a Republican House and Senate.
Under the old law, the financial manager effectively took over the role of the mayor and city council, or the school board, and could reorganize city departments and renegotiate collective bargaining agreements, but only if the unions agreed. Under the new law, the financial manager can dissolve local units of government and modify or terminate collective bargaining agreements without the consent of the unions.
The Detroit school district and seven local governments, Hamtramck, Highland Park, Flint, Three Oaks, Pontiac, Ecorse, and Benton Harbor have had financial managers under the old law, at various times. The Detroit school district still has a financial manager, as do Benton Harbor, Ecorse, and Pontiac. All except Hamtramck, Ecorse and Three Oaks are majority Black communities.
The new law makes appointment of a financial manager easier by including such factors as not making timely payments of withheld taxes and accounts payable. Many of these criteria would be insufficient to force a city into bankruptcy.
There is a review process and a right of appeal to the circuit court in the state capital, Lansing, but that is of no value if the distress criteria in fact exist. Financial distress can result from conditions beyond the control of a local government, such as a decline in property tax revenue because of plant closings.
There have been numerous protests in Lansing and as yet no Michigan community is threatened with the broad reach of the new law–with one exception. On April 14, the Benton Harbor financial manager who was appointed a year ago under the old law, Joseph Harris, issued an order forbidding the elected city council from taking any action except calling meetings, approving minutes, and adjourning meetings. He has assumed that he automatically has the full power of a financial manager under the new law. Potentially, the Michigan law is more toxic than some of the anti-union laws that have been passed in other states, but Governor Snyder is certain to meet hard resistance if he tries to use it to terminate collective bargaining agreements and local governments.