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The Power of an Emergency Financial Manager

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It is said that Italian dictator Benito Mussolini made the trains run on time. And if I were a peasant living in the crumbling alleys of 1920s Rome, I suppose I would have voted for him.

But the truth is Mussolini didn’t make the trains run on time. He simply said he made the train on time. And knowing how things turned out in Italy, I’m quite sure I wouldn’t vote for Il Duce now.

Which brings me to the goings-on in state government. Frustrated with incompetent governance and a river of red ink flowing through Detroit and Allen Park and Pontiac, the legislature has taken drastic steps to make our trains run on time.

The Senate on March 9 -- following the vote of the House last month -- passed a series of bills that give sweeping powers to emergency financial managers who would be assigned to struggling municipalities and school districts.

The emergency manager’s powers are almost unheard of in a democracy and go well beyond the Wisconsin repeal of collective bargaining that also passed March 9. It’s important to note that the Wisconsin bill excludes police and fire.

In Michigan, the emergency manager will have total power of the purse: with absolute authority the emergency manager will be able to sell assets like the water department, undo union contracts, abrogate collective bargaining agreements without discussion including those of police and fire. More worrisome still, the emergency manager will be able to dissolve local governments.

Seriously, that’s what we have here.

There is no doubt Michigan is bogged in a sump of red ink and public service unions have been able to spare their membership the necessary cuts in benefits and wages that private sector employees have had to endure. But tossing out representative government is our answer in Michigan?

I think my friends on the Detroit News editorial board put it best when they wrote: “The people have the right to elect their representatives even if they elect incompetent ones. It’s not the state’s job to shield them from the consequences of democracy.”

There can be little doubt these bills are aimed squarely at Detroit, a perennial debtor and a mismanaged municipality with the worst school district in the history of the United States.

But consider that the per capita debt of Detroit is about $9,000 while the per capita debt of the United States of America is about $45,000. Would Americans stomach the disbanding of Congress in favor of a financial czar? I doubt it. Where’s the Tea Party?

What is more, the emergency manager will not have to live in the jurisdiction or need to be an actual human being. Corporations may apply. Imagine a New Yorker with a green eyeshade running a red pen through the budget of a city he or she has never set foot in, and you receiving your pink slip from a call center in New Delhi.

Then ask yourself, what would the emergency manager do in Detroit? As Bettie Buss, a senior research associate with the non-partisan Citizen’s Research Council of Michigan points out, much of Detroit’s borrowing is guaranteed by money streams such as state revenue sharing, property taxes and casino receipts. (Video: Buss Explains City Budget ) By law, those debt agreements cannot be undone. That means Detroit – already maxed out on property and income tax rates – can only cut.

And what is left to cut? Police. Fire and EMS, which take about 45 percent of the budget. In fact, the city had to borrow $100 million just to pay for them this year.

Under the new rules, Dave Bing could be named emergency manager even while serving as mayor of Detroit. Maybe that’s why Bing, who stood on the dais at Snyder’s inauguration, has refused to fix the broken ambulance system despite the fact that the money is budgeted this year to hire more paramedics.

Is privatization in the works?

The reality is the city and its finances need to be fixed. Everybody knows that and everybody wants that. But I don’t trust one-man rule. Call me an American, I guess.

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