Pontiac Emergency Manager Order Postpones Democracy For City After Financial Crisis

Michigan Gov. Rick Snyder is interviewed after joining community leaders and employees at Beaumont Hospital in Royal Oak, Mic
Michigan Gov. Rick Snyder is interviewed after joining community leaders and employees at Beaumont Hospital in Royal Oak, Mich., Monday, July 1, 2013, to discuss the Healthy Michigan plan. Snyder is pushing his message for expanding Medicaid eligibility to hundreds of thousands of low-income adults. (AP Photo/Carlos Osorio)

DETROIT -- Michigan's controversial emergency manager law gives state-appointed financial managers sweeping powers to bring cities in crisis back from the brink. But critics say the law has largely been used to wrest control away from locally elected leaders in cities across Michigan with predominantly African-American populations.

Currently in Michigan, nearly 50 percent of the state's African-American population no longer has elected officials calling the shots in their cities or school districts.

Emergency managers are championed as having the ability to make tough financial decisions quickly, as evidenced in Detroit, where emergency manager Kevyn Orr filed for bankruptcy in July. But when the fiscal crisis finally ends, how long should citizens wait for their democracy to be restored?

In one city, it might take longer than residents ever expected.

Twenty miles north of Detroit, the city of Pontiac spent four years under state control before its financial emergency was officially declared over on Aug. 13. But before Pontiac Emergency Manager Louis Schimmel retired, he created a new position called the "city administrator," who wields all the financial powers of an EM.

Under PA 436, emergency managers can dissolve union contracts, write new laws, sell city property and overrule decisions made by elected leaders. They ultimately answer only to the governor, not to local voters. Now, Democrats are asking how Schimmel, who claims Pontiac is finally stable, could legally empower another unelected official to make all the fiscal decisions for the city.

Among those asking the question is state Rep. Tim Greimel (D-Auburn Hills), the leader of Michigan's House Democrats. In a letter sent last week to Gov. Rick Snyder (R), he called Schimmel's order naming Joseph Sobota, Pontiac's former community development director, as new city administrator "egregious" and "illegitimate."

Pontiac is the county seat of Oakland, located north of Detroit and long regarded as one of America's wealthiest enclaves. But the small city, now 52 percent African-American, hasn't shared in the county's good fortunes. It was once home to the Pontiac East Assembly and Motor Division factories, where the eponymous cars were produced. At its height, the city's population was well over 80,000; it now hovers just around 60,000. The Lions left in 2002 for a new football stadium in downtown Detroit. So did the annual Arts, Beats & Eats festival, and many restaurants and bars that once lined the streets have closed their doors.

Greimel, a former labor and employment lawyer, told The Huffington Post that he didn't originally oppose PA 436, but having watched three consecutive emergency managers run the city of Pontiac over four years has soured his opinion.

"What we have seen is that emergency managers have been completely and exclusively focused on very short-term questions regarding the city's budget at the exclusion of any focus on long-term economic development," he said.

In his two-year stint as emergency manager, Schimmel cut Pontiac's budget almost in half. He consolidated 87 different benefit plans for employees into one single coverage option, created a regional fire department with neighboring Waterford Township and eliminated the city's structural deficit. He even shuttered the police force, contracting with the Oakland County Sheriff's Department to patrol the city.

Under the watchful eye of a five-member transition board, Pontiac will now run the city with a $30 million annual budget, down from $57 million before Schimmel's tenure.

Voters struck down PA 4, the prior EM law, during the November 2012 election. So when Snyder and a Republican-controlled legislature passed a rewritten emergency manager law last winter, they emphasized a new measure that would allow mayors and other elected officials to vote the emergency managers out after 18 months. If cities like Pontiac are no longer found to be in a financial emergency, local control is supposed to return to the mayor and city council under the oversight of an advisory board.

In a 2012 interview with The Huffington Post, Snyder said a stronger EM law would allow his appointees to complete their temporary goals more quickly. "In some cases, they were there longer than I would have liked them to be there," Snyder said. "That was part of the problem ... They didn't have clear enough authority and broad enough authority to come do their jobs, and then get out."

So why not in Pontiac ?

In the Detroit News, Schimmel defended his decision to create the office of city administrator. Schimmel had previously served as the emergency manager of two other Michigan cities, Hamtramck and Ecorse, before the new law limited the scope of the position's power. Both cities fell back into financial crisis after his tenure.

"The state of Michigan itself said we want to make sure your changes hold up and good financial management continues in the city," said Schimmel. "What [Greimel] wants is for me to just walk out and turn my back on the very people who caused the problems in the first place."

Greimel disagrees. "Decades of de-industrialization and the flight of high-income people have decimated the tax bases of many communities in Michigan," he said. "That is what ultimately is driving these communities into their dire financial straits."

With nearly half of Michigan's African-American residents denied the right to locally elected leadership, Greimel argues that the law disproportionately impacts the voting rights for minorities in cities like Pontiac.

"There does seem to be a bias on the decisions of which communities have emergency managers imposed on them," he said.

Greimel thinks it's a possibility that other Michigan cities, like Detroit, could see a city administrator move in to pick up where the emergency manager leaves off.

"I totally expect that the governor and his administration are planning to impose city administrators across the state when the emergency managers leave," he told The Huffington Post. "And the only thing that's likely to stop it is if Michigan residents stand up and express their concerns about that kind of continuing undemocratic policy."



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