The Truth about the Emergency Financial Manager Bill (PA 4 of 2011)

The Emergency Financial Manager Bill (Public Act 4 of 2011) has received ample criticism and demagoguery. PA 72 of 1990 already provided for the appointment of an emergency financial manager. Robert Bobb was appointed under this act for the Detroit Public Schools. His authority under the act was constantly challenged as restricted only to financial matters, and he was handcuffed from doing much of what needed to be done to turn the district around. In January, a couple of Michigan cities (most notably, Hamtramck and Flint) were near declaring bankruptcy. This created urgency for state action to avoid the local bankruptcies which would have negatively affected the state's bond ratings and the interest rates paid by all Michigan municipalities, including school districts.

PA 4 provides for an early "alert" system, a thorough review process, the possibility of a consent agreement between the review team and the municipality. If, and only if, the consent agreement is breached or the economic condition of the municipality continues to deteriorate, then an emergency manager (EM) can be appointed. The EM has broader powers under PA 4 than previously under PA72. The most criticized enhanced power is the power to set aside collective bargaining agreements, but this power is no greater than that of a bankruptcy judge. The goal is to create sufficient incentives for the local government to take care of its own business responsibly so the rest of the state is not negatively affected, but if the local government cannot or will not do its job, then the EM is appointed.

Opponents of the new act have characterized the bill as "anti-democratic" and worse, in such reports as:

· Maddow on Emergency Manager Takeover of Benton Harbor, Michigan

· Save Jean Klock Park: What Benton Harbor’s Emergency Manager Could Mean for JKP!

To get the real facts, rather than the sensationalism and misrepresentations of the facts by partisan commentators, I suggest you refer to:

· Benton Harbor Facts: Implementation of an Emergency Financial Manager, by the Community Alliance (where the criticized action was actually taken by an EFM under PA 72, not the new act, and did not get rid of Jean Klock Park but actually increased its size by almost 40 acres while at the same time leasing a portion (less than 23 acres) of the existing park away from Lake Michigan for a golf course which added to the community's tax base)

· Local Government and School District Fiscal Accountability Act by the Citizens Research Council of Michigan, a non-partisan, credible source

· Bill Analysis of HB 4214 by the Senate Fiscal Agency, also non-partisan

A similar misrepresentation of the facts has been regarding the repeal of the Michigan Business Tax. Opponents claim that Meijers now will escape taxation, for example. The Meijer President Mark Murray has said, however, that his company would probably incur a slight increase in its business taxes due to the changes. Mackinac 2011: Michigan Business Tax's death was great for Meijer, right? Not quite Darn inconvenient facts, huh?

We need to regard attacks on much of what we are doing as simply the partisan attacks, trying to maintain the status quo, rather than making serious efforts at making this a better state.