Detroit's First Day under an "Emergency Financial Manager"

As of today, Detroit is under the control of a governor-appointed Emergency Financial Manager (EFM). The Motor City is the largest district in the nation to have its voters and elected officials sidelined by this new experiment in "crisis management."

Michigan residents might be wondering how this EFM got appointed. Didn’t they roundly reject financial managers in a statewide referendum in November? Michigan residents voted to repeal the EFM law by 53-47 percent after 200,000 people signed a petition to put the issue on the ballot. But this outburst of democracy didn't stop the Republican-controlled legislature and Governor Rick Snyder from ramming through a new law to do the exact same thing during a lame-duck legislative session a month later.

Detroit's new EFM is Kevyn Orr, a prominent bankruptcy lawyer who worked on the massive Chrysler restructuring in 2009 with the Washington, DC law firm Jones Day. Orr has his work cut out for him if he wants to win over the community. Many Detroit residents are vowing continued protests and resistance to the takeover, saying that taking away democratic governance is not the way to fix the serious financial challenges the city faces.

Undemocratic EFM Law Defeated at the Polls

After the EFM law was repealed in November, a new version of the law was passed and put on the governor's desk within 37 days. The new bill included many of the same extensive powers that voters rejected at the polls. This time the lame-duck legislature added a $700,000 appropriation, making the law immune to another veto referendum. (The same lame-duck session rammed an ALEC-inspired union-busting "right to work" bill through despite public outcry and massive protests.)

Technically, the new EFM law will not go into effect for another few days. An existing law from 1990 provided the legal justification for Orr's appointment, but the new, superseding law will greatly expand the powers the state's EFMs have.

Under the new law, EFMs replace the Mayor and the City Council and can "exercise any power or authority of any officer, employee, department, board, commission or other similar entity of the local government whether elected or appointed." EFMs can modify, reject, or terminate any contract at any time for any reason, including with public employee unions. They can sell public assets (other than utilities), take the city into bankruptcy with the approval of the governor, and can even ban any individual who does not comply with orders from government buildings and communications.

EFM as a Civil Rights Issue

Today, six cities and 9 percent of Michigan residents are being governed by an appointed EFM and are no longer represented by the local officials they democratically elected. While only a portion of Michigan residents are being disenfranchised in this way, these EFM take-overs disproportionately affect Michigan's African-American communities. A whopping 49 percent of Michigan's African-American residents are now under the rule of appointed EFMs, raising questions about the civil rights implications of the law.

Longtime Detroit Representative John Conyers asked the Washington Post, "How come all of the jurisdictions put under emergency management are majority African American? Has anybody noticed that? There seems to be a racial aspect, a racial component of the application of this law."

Reverend Wendell Anthony, pastor of Detroit's Fellowship Chapel lamented, "It is the civil rights issue of our time. I didn't vote for an emergency manager. I voted for a mayor. I did not give up my right to vote on the whims and fancies of a law that we believe is unconstitutional and immoral. We view it as another step in the direction of voter suppression and vote oppression."

Opponents of the appointment of the EFM in Detroit have picketed press conferences and have garnered national attention by driving along some of Detroit's busiest highways at painfully slow speeds during rush hour.

Stephen Boyle of the group FREE Detroit - NO Consent explained the reason behind the actions, which are being referred to as "the slowdown in Motown": "If we slow down traffic, maybe people will stop and listen for a moment, as to what's going on. This isn't business as usual."

EFM Law Pushed by Mackinac Center

As early as 2005, the Mackinac Center for Public Policy, an influential right-wing think tank in Michigan has called for emergency managers as a way of breaking public employee contracts and lowering wages for public workers. The Mackinac Center is a member of the State Policy Network and the American Legislative Exchange Council (ALEC) and has been funded by a number of right-wing foundations including the Dow Foundation, the Bradley Foundation, the Walton Foundation, the DeVos Foundation, and the Charles G. Koch Charitable Foundation.

Louis Schimmel, a former Mackinac employee who penned reports and articles on EFMs, was appointed the EFM of Pontiac, Michigan by the Governor Snyder in 2011. Schimmel "pursued the most aggressive turnaround plan in the state," according to Mother Jones. Schimmel 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," but Pontiac still faced a huge shortfall in 2012.

Will It Work?

There is at least one thing people agree on; Detroit is not doing well. Deindustrialization and the offshoring of manufacturing jobs led to high unemployment, loss of revenue for the city and public school systems, increases in crime, white flight from the city to better-off suburbs, and a snowball effect that has left Detroit a shell of its former self, with half its former population and with $14 billion in long-term liabilities. Increased revenue sharing and long term strategies are needed to rebuild the hollowed out city.

While Detroit's Mayor is characterizing the appointment of an emergency manager as an "opportunity" for the city, others are not so sure.

"It is difficult to identify a single instance where an emergency manager has succeeded in turning around the financial fortunes of a city or jurisdiction. The history of the emergency manager law in Michigan is replete with fiscal mismanagement and conflicts of interest," says Rep. Conyers who is demanding a federal audit of Michigan EFMs. "In the absence of any sort of checks or balances at the state level, it is vital that the GAO examine the law and its impact, particularly the impact on federal funding." Unions and others are prepping lawsuits to challenge the new law.

Even though Orr is being touted as a professional and being paid a salary of some $275,000 a year, he is already off to a rocky start. Reporters discovered that he owed over $10,000 for tax liens on his $1 million home in Maryland.

Orr paid the balance and called the situation "remarkably embarrassing," but the Reverend Charles Williams II, president of the National Action Network of Michigan, noted: "It is quite interesting that (Orr) feels he could manage the city of Detroit, and he's having trouble managing his own affairs."

CMD's Mary Bottari contributed to this article.