Editorial: EM law needs revamping

The Detroit News

Michigan’s emergency manager law is blamed as a major contributor to the Flint water crisis by the task force Gov. Rick Snyder appointed to identify the causes of the disaster, and how the state should respond. A key recommendation is to rewrite the law to assure the people don’t lose their voice.

While emergency managers have been successful in other cities, most notably Detroit and Lincoln Park, the failures in Flint and Detroit Public Schools, which has been under state control for more than six years, are so colossal as to justify the task force’s call for significant changes.

The challenge is to figure out a process that allows the state to intervene to prevent a municipal insolvency without turning the community into a Lansing dictatorship.

Michigan has the most aggressive emergency manager law in the country, although most states have some mechanism for taking over a troubled community’s finances. A common method is to appoint a financial control board with veto power over the financial decisions made by elected officials.

That’s a more cumbersome process, and doesn’t always provide the structural changes communities need to stay on a sound financial course.

There are a number of ways that Michigan could make its law better.

For starters, it should make sure the appointment of an emergency manager is truly the last resort. The law allows a consent agreement between the state and local officials that keeps the local leaders empowered, but gives them the leverage they need to alter contracts and take other drastic cost-saving steps.

Wayne County Executive Warren Evans used a consent agreement to extract concessions from labor unions and wipe away an operating deficit that risked pushing the county into emergency management.

Eric Scorsone, head of Michigan State University’s Center for Local Government Finance and Policy, says consent agreements are the better option generally, but adds, “if local officials are part of the problem, consent agreements are not as effective.” Still, it seems a preferable course and the one favored by the Snyder administration.

If emergency managers must be appointed, the state should provide communities with the resources needed to make the process work smoothly and quickly.

Scorsone notes other states give more financial support to a distressed community, including funds to hire outside experts, first dibs on state grants and targeted dollars to address specific problems that contributed to the emergency.

The manager also should have more training and oversight. Currently, Michigan has no uniform playbook for bringing a community out of a financial crisis. Each manager takes his or her own approach.

There should be specific guidelines for dealing with elected officials, more up-front training and a common framework for working through financial problems.

The law should also encode the concept that maintaining property values is the best course toward financial stability. Asset fire sales and slashing services often make the long-term problems worse.

Better oversight of the managers is also needed. While the emergency manager is appointed by the governor, most of his or her daily interactions are with officials in the Treasury Department. The managers should be more directly accountable, and there must be better coordination between the various state departments involved in the rescue.

Finally, and most important, the law needs a healthier respect for democracy. The task force made a specific point about protecting the public’s voice and representation.

More public hearings, particularly on the budget, must be guaranteed. And there should be a third party that residents and local officials can appeal to if the emergency manager is taking actions they feel are detrimental to the community.

Flint and DPS have cost the emergency manager law its credibility. Getting it back demands a major overhaul that provides a route for fixing municipal finances while maintaining the rights of residents.