Government Sold Off

Michigan Cities Being Sold Off

A Michigan emergency manager law permits the governor to appoint a receiver for a city in financial trouble, and that receiver can sell off all of the city assets.   Public Act 4, the Emergency Manager law, permits dictatorial powers for the Governor appointed manager.  Powers include firing of city employees, ending the functions of the city council, outsourcing of city ran departments, and the sales of city properties.  This is what happened in Pontiac Michigan—the article below details.  This is a harbinger of things to come in the US when the next wave of the depression hits (there was a 3.5 year gap between the first wave of the Great Depression in 1929 and the collapse of banking in March of 1933).     

They have the school system in their sights at

Michigan's Hostile Takeover

A new "emergency" law backed by right-wing think tanks is turning Michigan cities over to powerful managers who can sell off city hall, break union contracts, privatize services—and even fire elected officials.

| Wed Feb. 15, 2012 4:00 AM PST

Michigan Cities Being Sold Off

Updates, 3/30/12: A judge recently ordered Flint's emergency manager to step aside, finding that he had been appointed without adequate public input. A week later, an appeals court temporarily reversed the decision and put him back in charge while the case is being heard. Governor Rick Snyder hasasked Detroit to sign an agreement in which it would renegotiate union contracts and outsource city work in exchange for not receiving an emergency manager. In February, a statewide coalition opposed to the emergency-manager law, submitted signatures to put it up for referendum. If the state validates the signatures in early May, the law will be suspended until voters decide its fate in November.

When the city of Pontiac, Michigan, shut down its fire department last Christmas Eve, city councilman Kermit Williams learned about it in the morning paper. "Nobody reports to me anymore," Williams says. "It just gets reported in the press." This was just the latest in a series of radical changes in the city, where elected officials such as Williams have been replaced by a single person with unprecedented control over the city's operation and budget.

Gov. Rick Snyder put Louis Schimmel in charge of Pontiac last September, invoking Public Act 4, a recent law that lets the governor name appointees to take over financially troubled cities and enact drastic austerity measures. Under the law, passed last March, these emergency managers can nullify labor contracts, privatize public services, sell off city property, and even dismiss elected officials.

Schimmel got to work quickly, firing the city clerk, city attorney, and director of public works and outsourcing several city departments. City fire fighters were told that they would be fired if their department was not absorbed by Waterford Township's. Schimmel has proposed putting nearly every city property up for sale, including city hall, the police station, fire stations, water-pumping stations, the library, the golf course, and two cemeteries.

Williams and his six colleagues on city council have been stripped of their salary and official powers. "Nearly the whole city has been privatized," he laments.  Michigan's emergency-manager law is the centerpiece of the fiscal program enacted by state Republicans after they took over the Legislature and governor's mansion in early 2011. The law's supporters say it allows for a more efficient and nimble response to the budget crisis confronting local governments in the wake of the housing crash and near collapse of the auto industry. Critics are seeking to block and repeal what they call an illegal power grab meant to usurp local governments and break up public-sector unions.

"We haven't seen anything this severe anywhere else in the country," says Charles Monaco, a spokesman for the Progressive States Network, a New York-based advocacy group. "There's been nothing in other states where a budget measure overturns the democratic vote." Williams says emergency managers are able to enact draconian policies that would cost most city officials their jobs: "They couldn't get elected if they tried."

Benton Harbor, Ecorse, and Flint are also currently under emergency management. In Flint, the emergency manager has promised to restructure collective bargaining agreements with the city's police and firefighters unions. Benton Harbor's emergency manager banned elected officials from appearing at city meetings without his consent. Detroit, which is facing a $197 million budget shortfall, could be next: Mayor Dave Bing has proposed laying off 1,000 city workers and wrung concessions from public-sector unions in hopes of preventing Gov. Snyder from appointing an emergency manager.

Schimmel has pursued the most aggressive turnaround plan in the state. He says he's simply doing what elected officials have been unable to do: execute a plan for balancing the city's books quickly and efficiently. He's not there yet: The city of 60,000 is projecting a $7 million deficit for 2012. "One thing we can't do is print money," Schimmel says. "We're always chasing the dropping knife, fixing something here and losing revenue somewhere else."

With an indefinite term and a city salary of $150,000, Schimmel doesn't answer to anyone but the governor, at whose pleasure he serves. The city council can no longer make decisions but still calls meetings, which are routinely packed with angry residents. Asked by radio station WJR if the emergency-manager law hands power over to a "dictator," Schimmel sighed, "I guess I'm the tyrant in Pontiac, then, if that's the way it is."

Emergency managers aren't new in Michigan, which has been in dire financial straits for decades. Public Act 4 (officially titled the Local Government and School District Fiscal Accountability Act) beefed up a 1990 law that brought in state-appointed managers to several cities in the 2000s, without much success at stemming the flow of population, jobs, and tax revenue. Pontiac has been under some form of state-appointed management since 2009. Schimmel's predecessor laid off dozens of police officers, hired the county sheriff to patrol the city, and dismissed Mayor Leon Jukowski (whom Schimmel has rehired as a staffer paid $50,000)*. During that time, Pontiac's credit rating had dropped from B to triple-C. "They aren't creating revenue," Williams says of the managers. "You can't just cut your way out of a deficit."

Pontiac is not Schimmel's first clean-up job. In 2000, he was named the emergency manager of Hamtramck, where he served for six years. In 1986, a judge appointed him to oversee Ecorse's finances after the city landed in state receivership; he stepped in and privatized city services. Today, the city is back in debt, and back under state management. Schimmel concedes that the privatization strategy can backfire, but he blames inept local government. "If you don't have an overseer of the contractor, privatization can be much more expensive than in-house services," he explains.

Schimmel is also a former adjunct scholar and director of municipal finance at the Mackinac Center for Public Policy, a free-market think tank that shares his enthusiasm for privatizing public services. The center has received funding from the foundations of conservative billionaire Charles Koch, the Walton family, and Dick DeVos, the former CEO of Amway who ran as a Michigan Republican gubernatorial candidate in 2006.

In 2005, Mackinac published an essay by Schimmelthat called on Michigan's Legislature to give emergency managers the power to impose contract changes on public-employee unions and "replace and take on the powers of the governing body." When Republicans gained control over Lansing in 2010, Mackinac reprinted Schimmel's article. Last March, the center celebrated when the Legislature implemented its prescriptions in Public Act 4.

The Mackinac Center claims that Michigan could save $5.7 billion annually if public employees' benefits were comparable to those of private-sector workers. Public-employee unions say cuts to public-sector jobs have only worsened the state's economic woes with foreclosures and intensified reliance on state aid programs in cities like Flint, where the jobless rate was 17.5 percent at the end of 2011. "It's an acceleration of the downward spiral," says Brit Satchwell, president of the Ann Arbor Education Association, a teachers' union. "Our goal is [to] outlaw government collective bargaining in Michigan," wrote Mackinac's legislative analystin an email to a Republican state representative last summer. (The message was obtained by the liberal think tank Progress Michigan.)

The Mackinac Center is a member of the American Legislative Exchange Council, a clearinghouse for pro-business state legislation. (Its model bills have been linked to Arizona's anti-immigration law and Wisconsin and Ohio's collective bargaining bans.) James Hohman, the center's assistant director of fiscal policy, was one of 40 private-sector representatives at an ALEC conference in December 2010 where, according to minutes from the closed-door meeting, participants hammered out model legislation that would align public- and private-sector pay and restructure state pensions. (Jonathan Williams, ALEC's tax and fiscal policy director, did not respond to requests for comment.)

Foundations affiliated with the Koch brothers have funded ALEC's reports on state fiscal policy. The State Budget Reform Toolkit and Rich States, Poor States both echo elements of Michigan's emergency-manager law, encouraging state legislators to target public employees and identify privatization opportunities. The most recent Toolkit report recommends that states create a "centralized, independent, decision-making body to manage privatization and government efficiency initiatives." Michigan's law grants far more sweeping powers to one appointee.

Nearly one year after the passage of the emergency-manager law, its opponents are rallying to blunt its impact. The American Federation of State, County and Municipal Employees and the Detroit-based nonprofit Michigan Forward announced they've collected more than the required 160,000 signatures necessary to put the law up for referendum in November; they plan to deliver the signatures to the state on February 29.

Democratic Rep. John Conyers has called on the Department of Justice to review the law in light of the Voting Rights Act and the contract clause of the Constitution. As the state treasurer's office began a review of Detroit's finances to determine whether the city is eligible for an emergency manager, Democratic Sens. Carl Levin and Debbie Stabenow asked Gov. Snyder not to name any more emergency managers.

The Detroit-based Sugar Law Center for Economic and Social Justice has filed a lawsuit to block the law, claiming it violates the state constitution, including the home rule provision that defines residents' rights to elect a local government. Tova Perlmutter, the law center's director, says the suit isn't just about Michigan: "If we win this case, it will give other state legislatures pause before pursuing similar laws."

The Center for Public Integrity is a non-profit, non-partisan investigative news outlet.



On the passage of the law, Democrats are in bed with the Republicans in-so-far as supporting neoliberal policies, their squabbling is a distraction.

Michigan Republicans Blowing Up Yet Another Norm of Politics

—By Kevin Drum| Sat Apr. 7, 2012 10:05 AM PDT


couple of days ago Rachel Maddow highlighted an outrageous abuse of power from Michigan Republicans. Normally, it takes several months for new state laws to take effect, but a two-thirds "immediate effect" vote can cause laws to take effect right away. Lately, however, Republicans have been jamming through every law this way without bothering to actually get a two-thirds majority.  They pass the bill, then do a voice vote on immediate effect and quickly announce that it's been approved. Voila. The bill is law as soon as the governor signs it.

When I first heard this, my BS meter tingled pretty hard. Maddow characterized her story as a scoop, but that made no sense. I mean, Michigan still has a Democratic Party. If this were a huge abuse of power, they'd be yelling about it, right? So what's really going on?

Well, Democrats are yelling about it. They've filed suit to halt the practice and demand roll call votes on immediate effect. But that was just recently, and Republicans have been doing this for over a year. Why weren't Democrats screaming about this a year ago?

I'm not sure what's really going on here, and what we really need is for some longtime Michigan reporter to weigh in. None of them seem to have done that yet, though, so here's a crack at figuring this out. It's not definitive by any stretch, and it's long. Sorry about that. But here goes.

First off, here's a paragraph from a Detroit Free Press article on Thursday:

Over the years, as majority control shifted back and forth, both political parties in the state House have ordered immediate effect for legislation without recording a roll call vote. Because immediate effect requires a two-thirds vote majority the practice has often frustrated efforts by the minority party to slow down legislation they oppose.

Hmmm. Let's keep going back in time. Here's the Michigan Citizen last May, back when Michigan Republicans passed a controversial emergency manager bill. It suggests that Democrats opposed immediate effect, but didn't really oppose it all that hard:

“When their own rules say they have a chance, they didn’t try hard enough,” said Henry Teusch, a member of Hood Research....House Democrats say, however, they didn’t have a chance against the Republican-led House and Senate.

....According to House legislators, there is no written rule mandating a roll call vote on immediate effect of bills. The Speaker chairing the session can “gavel through” immediate effect, ignoring a roll call vote. “We yelled against immediate effect and the Republicans put it through,” said Rep. Harvey Santana, District 10. “House rule is the decision of the Speaker to grant or give the vote ... if you control the gavel you control the outcome.”

Let's keep going. This is from an editorial in the Michigan Citizen a few months after the vote:

It is time to kick the donkey.  ....Earlier this year, Rep. [John] Olumba recorded his vote against Public Act 4, the Emergency Manager law, in the House Journal. He also opposed the immediate effect of the EM law and requested a roll call vote. Although Democrats voted "no" on PA4, they did not at that time support Olumba's roll call request nor his suggestion to place their "no" vote in the House Journal. They were saving their lack of political might to oppose an issue that would, so far, affect Black cities and school districts.

This makes it sound increasingly like this really is a tradition and Democrats simply didn't object to it very strongly. But wait! Here are a couple of articles from 2007. (From ProQuest, so no links.) The first is a Detroit News piece about a difficult tax bill that passed only because of a deal that required several Democrats and Republicans in swing districts to vote for it:

And then there's Sen. Glenn Anderson of Westland, one of two Senate Democrats voting against both tax proposals — the other was Dennis Olshove of Warren. Republicans insisted he vote to give the service tax immediate effect — a motion separate from the actual tax increase itself. That took 90 extra minutes early Monday. 

Anderson, who said he genuinely opposes tax increases because his constituents loath them, finally voted immediate effect for the tax, but only after Republican Sen. Roger Kahn of Saginaw had done the same. Both are in Senate districts where the split between political parties is narrow and an unpopular vote on a big issue could be costly — "vulnerable for vulnerable," he said Tuesday of his vote strategy.

In this case there was no quick gaveling of the question. Several legislators had to be arm-twisted into voting for immediate effect. Here's another Detroit News piece about Democratic efforts to move up their primary date:

With a dozen members absent on an unusual Monday session day — the first work day after the Thanksgiving holiday and deer-hunting break — the House could muster just 61 votes to give the bill immediate effect. That's 13 votes shy of the two-thirds majority needed...."I think we'll get that (immediate effect) when the bill comes back to us again from the Senate," said House Speaker Andy Dillon, D-Redford Township, who decided over the weekend to hold Monday's vote.

Again, no quick gaveling of the immediate effect vote.

So what's the story here? If I had to guess, I'd say that gaveling through immediate effect is hardly unprecedented, and Democrats obviously didn't scream very loudly about this when the emergency manager law was passed last year. At the same time, it's also not automatic. Big, controversial bills often require a roll call vote for immediate effect, but Michigan Republicans, imbued with tea party spirit, have decided to ignore this and use it for every bill they pass.

So in some sense this is similar to Republican abuse of the filibuster in the U.S. Senate. It's not outrageous in the sense that Republicans are doing something unprecedented and anti-democratic. It's outrageous in the sense that they're playing Calvinball: breaking a norm of governance by taking a tradition that was used occasionally in the past and turning it into a routine part of party politics. That's something they're pretty good at.

UPDATE: Here's another take from Eric Baerren of Michigan Liberal, a blog about politics "from a vaguely leftish point of view." If I'm reading him correctly, he says that (a) "immediate effect" is nothing new; (b) Democrats used it a lot in the previous session; (c) but that was because they negotiated compromise bills with Republicans and actually had two-thirds majorities to gavel them through. Also this:

There isn't much that can be done about the laws passed last year, when the House Democrats should have complained loudly and bitterly about the misuse of Immediate Effect. They didn't, and there's not much to be done about it since the official record makes it look like a proper tally was taken. Now, however, they're doing the right thing and pressing for actual vote tallies, which is what I frankly thought this was all about in the first place (Democrats denied the right to roll call votes, not some new and breathless conspiracy).

If this is correct, then gaveling through approval of immediate effect is no new thing, but roll call votes have always been taken if the minority party demands it. That's not happening this time, and that's what Democrats are complaining about.

UPDATE 2: Jeff Irwin, a Democratic representative from Michigan's 53rd district, responds to a question about whether Democrats did this back when they controlled the legislature:

Has this been done before? Yes. Violating the clear terms of the Constitution has become commonplace in the Michigan House of Representatives. The big difference now is that since the Senate follows the Constitution, there was always one chamber where immediate effect votes would be counted and extremely divisive bills would not earn immediate effect in the Senate.

Today, Michigan Republicans have a 2/3rds majority in the Senate as well as a simple majority in the House. Therefore, House procedure has a real impact on important issues.