An emergency manager and Detroit's undue process

Mar 7, 2013 at 7:14 pm
As far as we can tell, not a whole lot of attention is being paid to a resolution introduced by Detroit City Council member Kenneth V. Cockrel Jr. yesterday. That’s unfortunate, because the issue it attempts to address is potentially of immense significance.

At stake is the ability of Detroit’s elected officials to have at least some say in choosing how the city will deal with the financial emergency it faces.

Here’s what’s going on:

Last November, Michigan voters went to the polls and, by a margin of 52 to 48 percent, repealed Public Act 4.  That extremely controversial law allowed appointed financial managers to take control of financially troubled municipalities and school districts.

In the wake of last year’s referendum, state Attorney General Bill Schuette authorized the reinstatement of PA 72, a law passed in 1990 that allowed for the appointment of emergency financial managers, who had less sweeping powers than those allotted to emergency managers.

Because PA 72 was automatically revoked when PA 4 was signed into law by Gov. Rick Snyder in 2011, critics on the left claimed it was illegal for Schuette to reinstate it, but those objections were made in vain.

In addition, the Republican-controlled Legislature quickly set about crafting a new emergency manager law to replace PA 4. As pointed out by Wayne State University Law School Professor John Mogk, the Legislature couldn’t just duplicate a law that has just been rejected by voters. There had to be some substantive difference between PA 4 and whatever the Legislature and Snyder decided to replace it with.

The result was PA 436, passed during December’s lame-duck session.

Because PA 4 was successfully attacked for being inherently undemocratic, the new law attempted to walk a fine line. Instead of completely taking away the authority of duly elected officials, as the old law did, PA 436, in effect, told them they were going to have to swallow some harsh medicine, but it at least gave them a small selection of pills to choose from.

In fact, the new law was titled the “Local Financial Stability And Choice Act.”

Under this new law, if the state determines a financial emergency exists, the elected officials governing a city or school district can select one of four options: consent agreement, emergency manager (receivership), neutral evaluation process (aka mediation), or Chapter 9 bankruptcy. (For bankruptcy to proceed, the governor would have to agree.)

But here’s where things get really tricky.

PA 436 doesn’t actually take effect until March 28. So, if the city’s attempts to appeal the governor’s decision fail, and someone is appointed to take control of Detroit between now and then, that appointee would technically be an emergency financial manager

Until March 28, at which that emergency financial manager automatically become an emergency manager, and the city is denied the opportunity to choose one of the other three options.

That’s the way PA 436 was set up, explains Terry Stanton, spokesman for Michigan Treasurer Andy Dillon.

In other words, the “choice” provision touted in PA 436 applies only to units of government where financial problems come to a head after March 28. For cities such as Detroit, on the other hand, it will essentially be as if PA 4 was never repealed.

They will have an emergency manager calling the shots, with the authority to void union contracts and sell off public assets — just as they could under the previous law. The only substantive difference is they seek to have the emergency manager removed after 18 months.

The resolution introduced by Cockrel and passed by the council “urges Gov. Snyder to respect the right of Detroit’s citizens to choose their own financial destiny by allowing Detroit’s duly elected representatives to make this important decision under Public Act 436

Look for more reporting on this issue in next week’s News Hits column.