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Michigan's Financial Manager Law

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The State passed a law allowing the governor to appoint a financial manager with wide ranging powers, including voiding contracts. They can hire, fire, layoff and limit spending pretty much as they please. As one might guess, the public employee unions are less than happy with this law and have mounted a campaign to have it placed on the ballot where the citizens of the state can void it as a constitutional matter. Several cities in the state are under supervision now and it sounds like Detroit soon will be if the law holds up. There has been quite a public debate, most notably on Frank Beckman's show on WJR in Detroit. Yours truly was caller number one. I am interested to know the opinions on this matter of contributors to the Forum. THX.

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The Financial Manager reports to the Governor. He functionally replaces all mayors, city or county or township boards; he has complete administrative and executive authority. He can void contracts of almost any kind. He can also rearrange substantially any municipal function. The one in Pontiac Mi. just dissolved both the police and fire departments and made agreements with other municipalities to provide those services. His tenure lasts until budget deficits are eliminated and the State Treasurer reports to the Governor that the crisis is passed.

Of course, the locals can always mess things up again. The downriver town of Ecorse has been under State supervision three times and is now looking at its fourth.

The leader of the petition drive actually told Frank Beckman on the radio that if the locals want to elect incompetents or crooks, that's their right as American citizens.

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In Michigan, the pre-requisite to such a manager being appointed is that the local government (or school district) must be in financial trouble. If the local organization goes bankrupt, the bankruptcy judge has a lot of power in voiding union contracts and so on. This process allows the state government to appoint an administrator with similar powers. So, it is like an administrative version of bankruptcy that tries to preempt a judicial one. I guess the key question is: do citizens really have the right to appoint a government of crooks? I don't see why this should be so. I think a state law that says that holds local governments to certain basic standards of fiscal responsibility is fine.

Politically, this cannot help the governor. The general attitude seems to a mix of people blaming him for disenfranchising black voters and breaking unions. Though I think he's trying to do the right thing by stepping in, a part of me says: let them go to the hell they voted for themselves. Folk who live in Detroit have had decades of notice that they're going downhill. Moving in will simply give the worst of their politicians someone else to blame.

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What is interesting is the difference between financial managers. Bud Schimmel in Pontiac, a long time acquaintance, is a genuinely tough guy. He just dissolved the fire department and outsourced it to a stronger local unit, in essence ousting all of Pontiac's administrative staff and union local, thereby eliminating the chief sources of graft and corruption. Michael Brown here in Flint is seen as a nice guy and an honest guy, but in the end he is one of the kinds of people who have perpetuated the problem.

As to representative government, one of the most vexing problems faced by the Founders is/was the protection of minorities from tyrannical or just stupid majorities. I CAN move if and when I really have to; I can get out of my house break even at worst and will not be able to afford such a house when I do. I am taking a calculated risk. But many good people in these cities can't move. My wife taught in Flint schools for five years and about 30% of the parents and students were people who were trapped and many residents of the City are in the same condition.

I don't have the numbers but I strongly suspect that a minority of residents pay all of the City income tax and property taxes that are paid. I know the City only collects about 85% at most of water and sewer bills. If the government(s) believe in the Constitution, they will protect the rights of this minority.

Whether they can or will is a good question. Whether they see the issue that way is another.

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