State control bill suggests a crisis situation at hand

March 12, 2011
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The final legislative hammering-out process will get started soon, now that the state Senate and House have passed separate bills that reflect Gov. Rick Snyder’s desire to appoint an administration-approved emergency financial manager to take over fiscally troubled cities and school districts.

A major difference between the two bills is the Senate’s version eliminated a House provision that would have allowed a private-sector company to be named an emergency financial manager. Still, a manager would have the power to overrule elected officials, dissolve units of government and school districts and terminate union contracts.

For years, many local public officials have said that the state has imposed rules and regulations that have slowly diminished local rule. But before last week, nothing like this bill — the Local Government and School District Fiscal Accountability Act — has come out of Lansing in recent memory.

“It’s scary as hell,” said Grand Rapids Mayor George Heartwell. “Because what it says is the state is preparing for a bunch of cities to go into receivership. I understand they’ve trained up to 100 people already to serve as emergency management officers to step into cities that have failed, where the state, in effect, wipes out the local elected body or disempowers that body, and an emergency manager steps in and runs the city.”

Heartwell said he wanted to make it very clear that Grand Rapids isn’t on anyone’s list as a candidate for emergency management. “But when they’ve trained up to 100 people and they’re expecting that they might almost immediately use up to 50 of those people, we know we are in a crisis here in the state of Michigan,” said the mayor.

The passage of the bills comes on the heels of the governor’s budget, in which he proposed eliminating state statutory revenue sharing to cities, townships and villages and cutting K-12 education funding by $470 per-pupil. Those budgetary actions could push some cities and school districts into the dire fiscal straits the Snyder administration could define as an emergency situation and be the catalyst for assigning a financial manager to assume leadership.

“(That’s) absolutely right. Let me say this: We’re trying very, very hard to work with this governor. You’re not going to hear the mayor of Grand Rapids bellyaching about the loss of revenue sharing, which is more than $6 million, because we have given the governor a number of very creative approaches to freeing cities up, or to implementing new measures that can help us as cities — help us help ourselves — instead of being there always with a hand-out,” said Heartwell.

“We’ve decided that we’re going to work with this guy. We’re going to give him a chance and we’re going to trust him. He has given us, at this point, no reason not to trust him. We’re not going to start picking on the brownfield tax credit, the historic preservation tax credit, or revenue sharing. We’re going to work with him,” added Heartwell.

The governor’s budget also proposes to eliminate the brownfield and historic tax credits. Emergency financial managers are already running the Detroit public school system and the cities of Pontiac, Ecorse and Benton Harbor.

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