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Dictatorship or Democracy? Push to repeal the emergency manager law goes local

Patrick Sullivan - June 27th, 2011
Dictatorship or Democracy? Push to repeal the emergency manager law goes local
By Patrick Sullivan
Over the past few months, there has been an uproar across the state over
Governor Rick Snyder’s plan to place emergency managers into school
districts and municipalities deemed to be under financial stress.
Emergency managers have broad powers to negate public union contracts and
to supersede local school boards, city managers and town councils. Local
communities that are under the kind of fiscal stress that could make them
targets include the Village of Elberta and Bellaire. Benton Harbor and the
Detroit School District have already been subject to emergency managers.
The Northern Express recently sat down with three of the locals behind a
petition drive to force a referendum to repeal Public Act 4, a law passed
in March at the request of Gov. Snyder to implement the emergency manager
program. We spoke to Amy Hardin, Betsy Coffia and Kevin Skarnulis. Francis
Cullen, the fourth member of the group, could not attend.
The group has joined with a statewide group called Michigan Forward in a
campaign that seeks to collect a quarter million signatures in order to
get a referendum on the ballot for the November, 2112 election.

NE: How did you meet and get involved in this protest?

Amy Hardin: We met through the rallies. We all were concerned about what
was happening in the State of Michigan, the erosion to the middle class
and our democratic principles, and so we met at the rallies and the four
of us just kind of coalesced into a group, feeling the exact same thing,
that we had to act now. ... We didn’t want to wait until the 2112 election
Betsy Coffia: Kevin spent his spring break as a teacher reading the law,
reading the Secretary of State website about what the rules are for the
people to put something on the ballot for a referendum, and there is a
limitation for how long we can actually do it and we realized that if we
didn’t act now it would be too late. And we also predicted, and I think
accurately, that as soon as this law was passed it would begin to be acted
on very aggressively. And it has been.

NE: Why should someone in Northern Michigan care about this law?

Kevin Skarnulis: Because it has such wide-reaching implications. It
started off, actually, that our state (Rep. Wayne Schmidt), said, when
Betsy first contacted him, that this law wasn’t really meant for us up
here because it was mainly targeted at the people who were mismanaging
their city governments and historically had trouble, and he basically said
we shouldn’t worry about it. It’s downstate’s problem. And that
immediately got my attention and got Betsy’s attention for sure, because
that doesn’t sound like the kind of Michigan I want, where one group of
people get treated a certain way.

NE: What local schools or governments could be taken over under this law?

Skarnulis: Suttons Bay schools, actually, is very much in financial
trouble. They’re not meeting the budgets, they’re actually in budget
deficit, and last year they had to privatize their busing system, so BATA
runs their busing system and they no longer have flashing red lights on
their buses. So traffic does not have to stop when they’re loading or
unloading students.
It’s pretty scary to me that a yellow school bus with red flashing lights
is something that is affected by the bottom line. And I think the fear of
having an emergency manager assigned to your area is, unless you get your
house in order no matter the cost, it’s the threat of takeover, and it’s a
bullying and intimidation tactic that is being used very well. My school,
Northport, is in pretty good financial shape, we’re well funded, and I
think we’ve made decisions based on a fear of how it will look to Lansing.
Hardin: The superintendent, Steve Cousins, of TCAPS, referred to this as a
“manufactured crisis” at a press conference last month. His concern, and
it’s a legitimate one, is that the State of Michigan has taken away money
from the school aid fund, a large amount of money – I believe it was about
$600,000 – took that away and put it into higher education, creating a
crisis in the schools, and then when they realized that there was a
surplus in another fund and that they were going to give it back to the
schools, they are now setting conditions -- ‘well you have to do this or
you have to do that in order to get any of this funding.’ So they are
actually creating the crisis for the schools.

NE: It sounds like you believe even if there aren’t emergency managers
assigned to Northern Michigan, this law will affect decisions made by
local governments.

Coffia: I think it already is changing how some governments and some
school boards are acting and how they’re feeling. They’re feeling the
sword of Damocles hanging over their head because of how tenuous this
whole trigger system could be that they could end up in trouble with the
state and have this process just snowball into them.
Hardin: Gov. Snyder has approached the bond rating agencies. Our state is
currently at a AA rating and he wants to restore the AAA rating that we
lost some years ago. And the bond rating agencies have said that they like
the emergency manager law but the only flaw that they see in it is that we
don’t appoint emergency managers soon enough. We wait until they’re in
crisis mode, so that incentivizes them more to appoint the managers before
there’s even a crisis. Maybe there’s just a perceived crisis. That’s very
frightening. That puts even more pressure on municipalities and school
districts to do things that they wouldn’t normally do, like privatize
school buses and things of that nature.

NE: What about those who argue that some schools and municipalities got
into financial trouble despite democratic oversight and now drastic
measures are necessary?

Hardin: We have to reframe the question: Is there ever any reason to
suspend democracy? We wouldn’t expect that to happen in Greece. They’re
under financial stress, probably from their own doing, but we wouldn’t
say, then Okay, you need a dictator to run your country. So why are we
saying this to municipalities and school districts around the state of
Michigan? It’s just undemocratic. It’s unconstitutional. There’s no reason
for it. I don’t care whether fiscal stress was caused by internal
mismanagement, corruption, or whether it was from an outside source which
is quite frequently the case here, in particular with school districts in
the state of Michigan. There’s no reason to suspend democracy.
Coffia: There were two things already in place, there was an emergency
financial manager law that was passed in 1990, and it did empower a
state-appointed person to come in and work in conjunction with the elected
officials and local community and in fact it has actually worked in Three
Rivers. In a matter of months their emergency financial manager working
with the local government and local community with no where near the kind
of power this person would have now, was able to assist. It’s the
difference between assistance and coming in and saying, “Guess what guys?
None of you know what you’re doing. Your community apparently is not smart
enough to elect good officials, so guess what? Nobody gets democracy now,
I’m in charge, no questions, no questions,” and that is where I object.
NE: What about a place like the Village of Elberta, which was recently
identified as being in extreme financial trouble. Couldn’t, in theory, an
emergency manager take over Elberta and turn things around?

Coffia: Okay, so you have a government board who is supposed to be doing
what they were elected to do in handling the finances, and they’re having
trouble doing it, whether we’re talking about Elberta or anywhere else.
And so if we say, Okay, you guys who are accountable to the public, the
public can vote you in or out, you guys aren’t doing a good job. Now we’re
going to put this person in.
If you can envision the Wizard of Oz and the guy behind the curtain, the
emergency manager is the guy behind the curtain. The community does not
have a say over the decisions that that person makes and you basically
cross your fingers and hope that they’re making the right decisions for
your community because you can’t vote them out, you can’t recall them, and
they don’t have to have public meetings to consult with the community
about the decisions that are being made.
Skarnulis: If you do have an emergency manager come in, they have the
ability to balance the situation by whatever means necessary, any means
necessary, and (once the shoreline or the parks) are sold, privatized, if
that’s the means they deem necessary, how does that end? Down the road,
what happens to that community? I know Betsy has talked about her access
to Torch Lake as a child, the idea that, that in that community, it’s
public access to their resources and privatizing something like that,
through an emergency manager, is something that cannot be undone. An
emergency manager has that power and you can’t just hope that they’re
going to be a benevolent dictator.
Hardin: Sale of public assets is one of the tools that emergency managers
are trained on as a means of balancing the budgets of the municipalities
and school districts. It’s right in the training.

NE: What kind of training do emergency managers receive under this law?

Hardin: Last year Andy Dillon, who was not the treasurer of Michigan at
that time, approached Michigan State University and asked them to develop
a training program very specific to this law. This law that had supposedly
not been written at that time but must have been written because the
training program was devised at that time. It costs $175, all you need is
five years of business experience. I mean that could be running a cash
register, I don’t know. And then you spend $175 and take 12 hours of
training to learn how to run an entire school district, which is, I mean,
that’s impossible. School districts are such complex entities that it
takes years and years. There’s a reason why ... they spend a lot of time
interviewing (superintendents), trying to find someone that understands
all of the moving parts of a school district, even a very small one.

NE: What triggers an emergency manager to be put in place?

Hardin: They took many of the triggers from PA 72 from 1990, very specific
audit points as to what would trigger a financial crisis or a crisis of
any kind or a pending crisis. They took all those triggers and listed them
and most of them are fairly reasonable. There are a few that are a little
bit iffy. But at the very end they include this catch-all trigger that
just basically says, (an emergency manager can be placed if) the state
treasurer wants to, for any reason whatsoever.
Coffia: The language that has been added is that we call sort of the
catch-all phrase, and keep in mind only one of these triggers has to be
met, not all of them. That keeps being said by politicians, like, “Oh,
there’s 18 triggers,” as if the implication is all 18 have to be met. No,
no, we’re talking about one. And here’s the catch-all: “The existence of
other facts or circumstances that are in the state treasurer’s sole
discretion for a municipal government are indicative of municipal
financial stress, or that the superintendent of public instruction’s sole
discretion for a school district are indicative,” so any of these, or if
the superintendent or the treasurer looks at it and says you know, “I
still think they’re in financial stress, so they need one.” It’s legal
language so broad you could throw a mule through it. It’s ridiculous.

NE: I understand one of your concerns is the lack of safeguards in place
if an emergency manager turns out to be corrupt.

Coffia: I don’t see checks and balances in this law at all. We have to
trust that Lansing is somehow going to have such a finger on the pulse of
what’s happening in Alba or Bellaire that they’re going to catch it if the
emergency manager starts misusing their power. They don’t have to listen
to the local population -- that is absolutely against everything I ever
believed in about what we are as a country and a state. To me this is a
recipe for asking someone to come in and misuse their power for their own

NE: You decided to be nonpartisan and you are not involved with the recall
campaigns targeting Gov. Rick Snyder or Sen. Howard Walker.

Hardin: I’m a campaign manager and I’ve run campaigns for Republicans and
for Democrats and also a district court campaign, which is nonpartisan, so
I look in terms of who’s the best candidate or what’s best for the State
of Michigan. Sometimes it’s Republicans, sometimes it’s the Democrats.
That’s why I remain independent myself, and this campaign has to remain
nonpartisan particularly because we want to have people on the far right
understand that this affects them very much, too. Tea Party people should
be concerned about this law.

NE: The petition drive began on Saturday, June 18. How did things go?

Hardin: We had about 16 people working about five counties concentrating
in the population center here in Grand Traverse County and we gathered
about 1,200 signatures, which was very, very good, within just a few hours
to gather that many signatures in a more or less rural area. That is one
third of our goal for Northern Michigan itself so we’re very pleased with
how well we did. We did not have anyone that heckled us or was mean to us.
Everyone was very enthusiastic. They raced up and taid, “Where do I sign?”
And we had to actually slow them down to make sure they signed properly,
because they were so eager to sign these petitions.

NE: You’ve found a lot of like-minded people through social media. How has
that worked?

Coffia: Kevin created a Facebook page back in March, the day after the
rally, and for about a week or two it stayed pretty quiet. It’s called,
“reject emergency managers.” We started injecting it everywhere on
Facebook where we saw there was dialogue about what was happening in the
state, you know, concerns about what was coming out of Lansing. We went in
and just watched and spent hours just like, plugging it in, and talking to
people and directing them there and we watched it jump from 20 to about a
hundred in about 24 hours and then it was 200, and then it was 500. ...
Within about three weeks we had 300,000 views and we had been mentioned in
the Nation, the Michigan Messenger, a couple of different places, we were
getting a lot of traffic and we have had a steady stream of like, “When is
that petition going to be ready, this is worst thing I’ve ever heard of,”
etcetera, etcetera. It’s been really amazing. It’s like a very small
version of Tunisia or Egypt, using popular media.

What Our Representatives Have to Say About
Emergency Managers

By Patrick Sullivan

We emailed questions to three Northern Michigan representatives who
support the Emergency Managers Public Act 4 to give them a chance to
defend the law and respond to criticism.

NE: Why do you think Public Act 4 is good policy and what do you say to
people who are worried that it’s undemocratic and lacks checks and

Sen. Howard Walker: It is good policy first and foremost because it
prevents certain local units of government, the ones that are being
managed with an almost malicious level of disregard for the people they
were elected to represent, from going into bankruptcy and making their
inability to manage their local affairs into a problem that state
taxpayers could end up paying for.
I think people who are fervently opposed to the idea of this legislation
should give some serious consideration to what could happen without it.
Without the reforms we put into place, some cities and local units of
government would have no option other than bankruptcy. A bankruptcy judge
would have similar powers to a financial manager but with no direct
oversight by the legislature or the executive branch.

Rep. Greg MacMaster: Michigan cities and school districts are facing a
worse economic storm than anyone could have predicted, creating a
situa-tion where local governments are tied into older agreements that are
no longer financially feas-ible. In some cases, gross mismanagement has
put cities and school districts on the brink of failure, leaving taxpayers
and schoolchildren in the lurch.
In other cases, large labor contracts, escalating health care costs,
declining revenue, property that won’t sell, and ill-timed infrastructure
improvements threaten to bury cities and schools under mountains of
escalating debt.
This public act allows local governments to work with the Department of
Treasury to address financial issues earlier and hopefully avoid the EM
process entirely.

Rep. Wayne Schmidt: For the first time in state law, this legislation
helps to prevent the necessity for an emergency manager by providing local
governments with the tools to remedy solutions themselves. Local
govern-ments will have the opportunity to work with the state
to develop a plan to improve their
financial situation without having to appoint an EM.

NE: What would you tell people who haven’t made up their minds about the
law to make them a supporter?

Walker: I would tell them to look at situations where managers have been
appointed in the past. These are situations where corruption was rampant
and where the public trust was being seriously abused, to the point where
the financial security of the entire state was being put at risk. I have
to wonder, do people really want to go back to that, are they really that
satisfied with the status quo? Things in Michigan have to change, and I
think the silent majority understands that.
MacMaster: This legislation contains a plethora of options and incentives
for local governments to solve their financial difficulties without the
need for an Emergency Manager. There are now 18 criteria that could
trigger a preliminary review of the local government. If the preliminary
review results in a finding of probable financial stress, then a full
review is undertaken. If the review results in a finding of probable
financial stress, the review team will work with the local elected
officials in order to develop a consent agreement that could include a
continuing operations or recovery plan to rectify the financial

NE: What safeguards does Public Act 4 contain that would prevent
corruption on the part of the Emergency Manager?

Walker: Emergency Financial Managers are overseen directly by the
legislature and the governor. I believe that is an adequate check against
their power, if they are doing a bad job, they can be removed.
MacMaster: The emergency manager reports to the governor, who is
accountable to the people at election time. Furthermore, a provision was
added so that the EM can be removed by the Legislature, which also reports
to the people via elections. If an EM is not granted the authority to
rectify the fiscal distress, a federal judge would take over once
bankruptcy occurs. Federal judges do not face the voters through election,
thereby resulting in no local or state input into the recovery.

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