Financial "martial law" coming to Michigan

[Yooper]

Tax incentives for business to be absorbed by the proles.
Isn't life strange?
March 11, 2011 5:52 PM
Michigan bill would impose "financial martial law"
Posted by Stephanie Condon 364 comments
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Michigan Gov. Rick Snyder signs his first bill as governor at the State Capitol in Lansing, Mich., on Tuesday March 8, 2011. [[Credit: David Coates,AP Photo/The Detroit News)
Michigan lawmakers are on the verge of approving a bill that would enable the governor to appoint "emergency managers" -- officials with unilateral power to make sweeping changes to cities facing financial troubles.

Under the legislation, the Michigan Messenger reports, the governor could declare a "financial emergency" in towns or school districts. He could then appoint a manager to fire local elected officials, break contracts, seize and sell assets, eliminate services - and even eliminate whole cities or school districts without any public input.

The measure passed in the state Senate this week; the House passed its own version earlier. The two versions of the bill are expected to be reconciled next week, and Republican Gov. Rick Snyder has said he will sign the bill the bill into law.

Democrats and their allies are decrying the legislation as a power grab and say it's part of a wider effort taking place in several states, such as Wisconsin, to weaken labor unions.

"It takes every decision in a city or school district and puts it in the hands of the manager, from when the streets get plowed to who plows them and how much they are paid," said Mark Gaffney, president of the Michigan State AFL-CIO. "This is a takeover by the right wing and it's an assault on democracy like I've never seen."

U.S. Rep. John Conyers, a Democrat who represents Detroit, said in a statement that in a given city, the governor's new "financial czar" could "force a municipality into bankruptcy, a power that will surely be used to extract further concessions from hardworking public sector workers."

He said the legislation raises "serious constitutional concerns." On top of that, he said, allowing an "emergency manager" to dissolve locally elected bodies "implicitly targets minority communities that are disproportionately impacted by the economic downturn, without providing meaningful support for improved economic opportunity."

Republican state Sen. Jack Brandenburg said several urban areas of the state, especially Detroit, are in "bad shape" and require "financial martial law," the Daily Tribune reports.

The emergency manager, he said, "has to have the backbone, he has to have the power, to null and void a contract." In response to concerns that local leaders will have to cede control, Brandenburg said, "I'll tell you what, I think that in a lot of these places there is no control."

An emergency manager would only be put in place if several other steps to save a city's finances failed, and Snyder has said in recent weeks that removing elected officials or breaking contracts would be a last resort for an emergency manager. In addition, the legislature would have the power to remove an emergency manager.

As the "emergency manager" bill nears final passage, state lawmakers are also considering Snyder's proposed budget, which would cut spending on schools, universities, prisons and communities, according to the Detroit Free Press.

Snyder has also proposed eliminating $1.7 billion in tax breaks for individuals while cutting $1.8 billion in taxes for businesses to spur job growth. Much of the $1.7 billion in new tax revenue would be "coming from retirees, senior citizens and the working poor," the Free Press wrote in an editorial.

Tags: emergency managers , Michigan , unions , budget
Topics: State Politics
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[1KielsonDrive]

This isn't 'Martial' law, it's McCarthy's law.

[Danny]

The bill is unconstitutional. Letting EFM's take over all city and public services is a form of dictatorship. Our U.S. Constitution prohibits self strong governments over balanced governments. That is why our forefathers want a government that have checks and balances. MICHIGANDERS! don't just protest about the bill. Take your appeals to the U.S. Supreme Court and overturn the "Financial Martial Law Act."


WORD FROM THE STREET PROPHET

Take back the American Dream. Recall Snyder, THE NERD!

Neda, I miss you so.

[Yooper]

The sad part is this is not a Democratic process.
I can't cast a vote on this proposal.
Where are the teabaggers who expound on the founding fathers idea of democratic principals as a central point in their stance against government's misuse of power?
My guess is that they will bundle this approach and stick a label on it with something like "Action to Preserve American Working Class."
What a mess.

[ndavies]

Sorry, but his law is desperately needed. If your cities elected officials screw things up so bad that an outside agency needs to be called in to clean up the mess, Then they deserve to lose their power.

It's simple, Keep your city/school district solvent, or lose all control over it. There are now consequences, if you expect the state to come in and fix the mess your elected officials created.

[belleislerunner]

Quote: "The sad part is this is not a Democratic process. I can't cast a vote on this proposal."

A refresher of the way our democratic republic works. We vote in elections for representatives that we feel most closely align their views with ours. Those reps go to Lansing and make laws as they seem fit. If we don't like a law - we have the right to recall the politician or vote him out of office next election. A politican is not forced to listen to our perspective on every issue that crosses his desk. That's why we selected him to go to office on our behalf.

Ever single representative in Lansing is there because of one reason- and that reason is indicative that in every scenario - the majority of citizens in a specific geograhpic locale selected that candidate to represent their interest. If you don't agree with that choice - or the repsentative's views - that's perfectly fine. But in the last election - a majority of people had a view different than yours. That is a democractic process. And one you should be proud of.

[Mr. Houdini]

Democratic process blows.

[Yooper]

Am I supposed to believe that cities and towns who are experiencing shortfalls should be taken over by some fuckwads from the state level?

Have you ever considered exactly why these municipalities are in so much trouble with their funds?

Hint: Bernank

I suggest to you to do a bit of research on Fed interest rate curves.
Then get back to me on your supposition.

[Yooper]

I voted against this guy.
You're right, I no longer have a say in the democratic process.

[JBMcB]

Have you ever considered exactly why these municipalities are in so much trouble with their funds?

Yes, because their budget projections assumed a constantly increasing level of income. This included contracts and non-discretionary spending that they cannot change if the economy sours. Then, the economy soured.

That's it in a nutshell. The reason for the economy souring doesn't really matter - municipalities need to be ready for this possibility. They weren't.

[ndavies]

Doesn't matter what caused the problem. If your city is insolvent the emergency financial manager needs the tools to fix the problem. If the manager can't renegotiate the contracts and can't get control of the finances, there is nothing they can do. The problem persists.

The only other way is for people who didn't have any control over the situation to come in and hand large bags of money to the entity that is in trouble. Nobody is going to give a city money witout first gaining control of the outgoing cash. You just end up with the pissing contest that is the DPS.

[Detroitnerd]

Yes, because their budget projections assumed a constantly increasing level of income. This included contracts and non-discretionary spending that they cannot change if the economy sours. Then, the economy soured.

That's it in a nutshell. The reason for the economy souring doesn't really matter - municipalities need to be ready for this possibility. They weren't.

Actually, the people who've been "ready" have been the right-wingers at Cato Institute, chomping at the bit to use this crisis as a means to break public unions. And the reasons for the economic problems do matter: This was a crime, and nobody's going to jail for it. See the Academy Award-winning "Inside Job" for the real story on who crashed the economy; hint: They're a lot of the same people who stand to benefit from crushing unions and ramming privatization down our throats.

[Searay215]

Aldolf Snyder and his Republican Nazi's are at it again......I'll bet their are working on a law that allows him to remain in office indifinitely....you watch.

[Yooper]

Give me a nutshell explanation of what happens to these funds when their safe investments go from 7%/yr. to 0.8%/yr.

It's criminal misadventure, where the low rates force fundies to invest their hard earned monies with the Wall Street boys.

Its not worker greed, it has more to do with estates in The Hamptons, and the coast of New England.
It's a wonder to see the cars on the streets there.
Pensions are fueling their personal jets too.

[rjk]

Stephen Henderson had a good commentary on this in the Freep the other day.

Typical overreaction and hysteria over this bill.
The far right does the same thing anytime a bill comes from the democrat side.

[3WC]

Yooper and others who seem to be so concerned: The whole thing is nonsense as it applies to cities and other municipalities. There has long been a federal recognition that such a tool may be necessary. It's called Chapter 9 of the U.S. Bankruptcy Code. The governor merely has to appoint the mayor or some other person as Receiver of the municipality and that person files for Chapter 9 protection and thereby gets all the rights and powers of a bankrupt estate, including the right to terminate union contracts. From what I've heard the new law-in-formation just complicates a proven, more simple process.

Bing should have taken that approach a long time ago, but couldn't because Granholm wouldn't go along with it, the nitwit. What's your mayor waiting on?

[Detroitnerd]

Oh, yeah. Crushing unions, eviscerating home rule and unelected people calling the shots are all as American as apple pie. Pfffttt ...

[3WC]

Well, Detroitnerd, who are you referring to as "unelected people? Wasn't your legislature elected?

You probably mean, "unelected non-Detroiters" don't you? Well, look at your school system, run [[into the ground) by elected locals. Proud of that? How about your locally elected council? Think they've done a great job? And, do you think your local public employee unions have acted responsibly, either to their members, or the public?

Many would argue that Detroit is a dysfunctional city and has been for a long, long time. Don't you think that if Detroit is ever to gain a modicum of respectability that possibly it's time to take more creative and harsher action?

MI needs a someone like Wisconsin's governor, who is not afraid to take the necessary steps to avoid ending up like MI or Detroit.

Tell us your scenario [[realistic, please, not the usual pie-in-the-sky platitudes) by which Detroit will ever gain some semblance of functionality.

[JBMcB]

Actually, the people who've been "ready" have been the right-wingers at Cato Institute, chomping at the bit to use this crisis as a means to break public unions.

Which has nothing to do with the lack of preparedness that municipalities have shown in dealing with the financial crisis.

And the reasons for the economic problems do matter: This was a crime, and nobody's going to jail for it.

That's some fantastic insight - and it doesn't help city governments out of the financial bind they are in.

[mwilbert]

Oh, yeah. Crushing unions, eviscerating home rule and unelected people calling the shots are all as American as apple pie. Pfffttt ..

I don't think it should be done often [[and the bill probably makes it too easy) but in extreme cases what is the alternative? If the local political system can't deal with its financial problems, and I would claim that in Detroit, for example, it hasn't been able to do so for a long time, then what is supposed to happen? Wait until they are literally insolvent and can no longer finance their operations at all? Creditors seizing city assets? At some point you need someone who has fewer constraints on their actions, legal and political, to get things into balance.

There has long been a federal recognition that such a tool may be necessary. It's called Chapter 9 of the U.S. Bankruptcy Code. The governor merely has to appoint the mayor or some other person as Receiver of the municipality and that person files for Chapter 9 protection and thereby gets all the rights and powers of a bankrupt estate, including the right to terminate union contracts. From what I've heard the new law-in-formation just complicates a proven, more simple process.

I am pretty sure that Michigan already had a process in place which required the appointment of a financial manager before bankruptcy could be filed. The bill under discussion broadens the circumstances under which such a manager can be appointed and increases some of the position's powers.

This is a description of the old process:

Municipal Bankruptcy: Not in Michigan

Unlike California and other states, struggling Michigan municipalities do not simply enter receivership and declare bankruptcy. Instead, if a local unit continues to falter, it eventually comes under PA 72, under which the governor declares a financial emergency. An emergency financial manager may be appointed who has broad authority, including the right to renegotiate contracts. “Several municipalities in Michigan have emerged from PA 72 and moved forward, including Flint and Hamtramck,” said Washington. The Village of Three Oaks will soon join them.

A local unit financial emergency can only proceed to Chapter 9, municipal bankruptcy, after a financial plan has been in place for at least 180 days, and the emergency financial manager has determined that there is no way to remedy the emergency in a timely manner. In addition, the emergency financial manager must petition the Emergency Financial Assistance Loan Board who must not disapprove the request. To date, Michigan municipalities have always avoided Chapter 9.

[Detroitnerd]

I don't think it should be done often [[and the bill probably makes it too easy) but in extreme cases what is the alternative?

Crack down and regulate the corrupt BANKERS and INVESTMENT HOUSES and RATING AGENCIES that caused the whole problem in the first place.

Put them in jail, take away their ill-gotten gains and either they accept regulation or they get nationalized.

Tax the corporations fairly. Tax the rich completely. Have them pay their fair share.

Only enforcement and transparency will stabilize the housing market, which will take care of those tax revenues.

Then, once the rich of this country aren't crashing the economy, creating bubbles and dodging taxes anymore, we should have a program to put people to work so they can stimulate the economy by YOU KNOW .... actually spending money.

But NOOOOOO. We're going to use this occasion to crack down on the very people who do most of the working and living and buying and spending, taking away their money to pay for tax breaks for the richest few.

And this is presented as a matter of fiscal responsibility? BWAHAHAHAHAHA!

I would like to sponsor the bill. Let's call it: The Putting America's Foot in the Ass of the Super-Rich Act of 2011.

[iheartthed]

Clearly the governor is a political novice. With all these newly elected Midwest Republican governors making serious political errors in judgment like this 2012 is gonna be a cake walk for Obama.

[defendbrooklyn]

Who is the EMF that is going to take over the state of Michigan? State Government does not have a great track record of being fiscally responsible and in the black…

[Detroitnerd]

Who is the EMF that is going to take over the state of Michigan? State Government does not have a great track record of being fiscally responsible and in the black…

Yeah, if the state can decide that the voters of municipalities don't need democratic representation, shouldn't the guv's first step be ... to step down? To appoint an EFM to run Michigan for him?

[English]

If you think that EMFs, abolishing public employee unions, and denying people the right to home rule is going to solve the mess in Detroit, I've got a bridge in SW Detroit to sell to you.

I love how people conveniently forget that the state of Michigan took over DPS in the late 1990s. How did that work out for us, hmph?