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Michigan's hostile takeover: a law pushed by a Koch-backed think tank gives near-absolute powers to unelected city managers.

When 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," says Williams. "It just gets reported in the press." This was just the latest in a series of radical changes in the city, where elected representatives such as Williams have been ousted by a single official 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, which lets the governor name emergency managers to take over financially troubled cities and enact drastic austerity measures. Under the law, passed in March 2011, these appointees can nullify labor contracts, privatize public services, sell off city buildings, and even fire elected representatives.


With an indefinite term and a salary of $150,000, Schimmel doesn't answer to anyone but the governor. He got to work quickly, dismissing the city clerk, city attorney, and director of public works, and outsourcing several departments. Firefighters were told that their department would be absorbed by a nearby township's--or shut down. Schimmel said just about every city property could be put up for sale, including City Hall, the library, parking lots, community centers, and the golf course. "Nearly the whole city has been privatized," says Williams.

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. Its supporters say it allows for a more nimble response to the budget crisis confronting local governments in the wake of the housing crash and near collapse of the auto industry. Critics call it an illegal power grab meant to usurp local governments and break up public-sector unions. "There's been nothing in other states where a budget measure overturns the democratic vote," says Charles Monaco, a spokesman for the Progressive States Network, a New York-based advocacy group.

It just so happens that key parts of the new law had been advocated by Schimmel, a former adjunct scholar and director of municipal finance at the Mackinac Center for Public Policy, a think tank that shares his enthusiasm for privatizing public services. In 2005, Mackinac published an essay by Schimmel that called on Michigan to beef up emergency managers' powers so they could impose contract changes on public employee unions and "replace and take on the powers of the governing body." The center has received funding from the foundations of conservative billionaire Charles Koch, heirs to the Walmart fortune, and former Amway CEO Dick DeVos.

The Mackinac Center is also a member of the American Legislative Exchange Council, the clearinghouse for pro-business legislation whose model bills were echoed in Wisconsin's and Ohio's public-sector collective bargaining restrictions. Foundations affiliated with the Koch brothers have funded ALEC's reports on state fiscal policy, which encourage legislators to target public employees and identify privatization opportunities. ALEC's most recent "State Budget Reform Toolkit" recommends that states create a "centralized, independent, decision-making body to manage privatization and government efficiency initiatives."

In addition to Pontiac, the cities of Benton Harbor, Ecorse, and Flint were also put under emergency management. Flint's manager said he would review all collective bargaining agreements with city employees. Benton Harbor's emergency manager has prohibited elected officials from appearing at city meetings without his consent. Detroit is facing a $197 million budget shortfall; in March, Gov. Snyder asked the city to hand over financial control to a nine-member advisory board--or else he might send in an emergency manager.

The law has set off a backlash. In February, opponents submitted signatures to put it up for a referendum in November. Democratic Rep. John Conyers has called on the Department of Justice to review its constitutionality. In March, a judge ordered Flint's manager to step aside, finding that he had been named without adequate public input. And the Detroit-based Sugar Law Center for Economic and Social Justice has sued to block the law, claiming it violates the state constitution. Tova Perlmutter, the center's executive 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."

Meanwhile, in Pontiac, Schimmel has pursued the most aggressive emergency plan in the state. He says he's simply trying to do what city officials have been unable-to-balance the books quickly and efficiently. He's not the first to try: The city has had a state-appointed manager since 2009. Schimmel's predecessor dismissed the city council and the mayor (whom Schimmel has rehired as a staffer for $50,000). Schimmel has hired a new city clerk and director of public works but not a new city attorney, since legal work has been outsourced to private firms. The city is projecting a $7 million deficit for 2012.

"One thing we can't do is print money," says Schimmel, who was previously called in to overhaul the finances of Ecorse and Hamtramck. "We're always chasing the dropping knife, fixing something here and losing revenue somewhere else." Asked by Detroit 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."

The War President

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Paul Abowd is a reporter at the Center for Public Integrity, which publishes
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Author:Abowd, Paul
Publication:Mother Jones
Geographic Code:1U3MI
Date:May 1, 2012
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