Gambling revenues cut in half in the last eight years. Property values declining. A third of its casinos shutting down. “Unsustainable bond issuances” funding pension payments. “Imminent danger of running out of cash.”
That’s what former Detroit Emergency Manager Kevyn Orr will face as a special consultant to Atlantic City’s newly named emergency manager, according to New Jersey Gov. Chris Christie’s executive order. Here’s the full document:
A much heralded piece of regionalism during Detroit’s bankruptcy case, the Great Lakes Water Authority was part of the city’s exit from Chapter 9. Now, Macomb County Executive Mark Hackel says some of the numbers involving the authority are not adding up. He explains his concerns to WDET’s Quinn Klinefelter.
At 22:10 of the town hall face off last night, moderator Stephen Henderson, Detroit Free Press Editorial Page Editor, asked the candidates about Detroit’s bankruptcy and the emergency manager. Here is a transcription of the questions, the answers and the follow up from Republican candidate Gov. Rick Snyder and the Democratic challenger Mark Schauer.
Freep columnist Nancy Kaffer weighed in on the topic in this piece today, and moderator Christy McDonald, from our Detroit Journalism Cooperative partner Detroit Public Television, reviewed the town hall today on WDET’s Detroit Today.
STEPHEN HENDERSON: Detroit, the city of Detroit, has an emergency manager and is trying to get through a complicated bankruptcy. Is this the right policy, the right approach to the relationship between cities and states? Is there more the state needs to do to prevent cities from falling into those financial problems? And what do they need to do to help them out on the back end?
GOV. RICK SNYDER: That was a big question, Stephen. Let me start the other way with actually what we’re doing now is we’re working on an early warning system to help communities because I never want to appoint an emergency manager, and it’s not a subjective process folks. It’s an objective process. I don’t simply decide that. Certain conditions in terms of a financial emergency have to exist first.
With respect to Detroit I went through that in a very systematic way. Tring to work with the prior administration in Detroit to say “Let’s just work together.” That didn’t work. We did a consent agreement to say the city needed to do certain thing to get the city out of trouble. Those things weren’t done. So then it came to an emergency manager. So I appointed an emergency manager. And then it came to the question of actually putting Detroit in bankruptcy. That was one of the toughest decisions to be made in the United States. It was the right decision to make.
Look at where we are today. We’re within a month to two months most likely of coming out of bankruptcy. We would have shed $9 billion of liabilities. If we hadn’t done this, the operating budget for the city of Detroit, more than 60 percent would go to paying past debts. There would be no money for services. In the meantime while this has been going on, what’s been happening? Streetlights have been going up. Trash is being picked up. Public safety is improving. Violent crime is down in double digit percentages in the city of Detroit. All these good things are going on and now we’ve transitioned back out because my goal is to have the emergency manger come in, do their job, get out, be done and get it back to the community with good oversight though so it doesn’t fall backwards. Stop and think: Have you ever thought you’d see Detroit as well poised for a bright future as you see today?
HENDERSON: Congressman. You have opposed the emergency manager legislation, how would you handle all of this differently?
SCHAUER: Well, first I believe in democracy. The people voted in 2012 to overturn that law. As governor, placing myself becoming governor in 2011, I would have abided by the will of the voters. What I would have done is personally led. As governor, I will be in Detroit. I will work out of the office on Cadillac Place and be a full partner with Mayor Duggan for the comeback of Detroit. Mayor Duggan is supporting me because he knows that I will be a strong and active partner. We need good jobs in our communities, but what I will do as governor, in addition to personally lead, is put together financial transition teams where we can be proactive. What our current governor has done, two things, is engaging in a strategy of fighting fires, fighting crises. Of course a $69 million revenue-sharing cut for police and fire in the city of Detroit didn’t help. But after cities get into financial crisis and school districts get into financial crisis, they assign emergency managers.
The second thing, quickly, is I never would have cut retiree pensions. Our constitution is clear: pensions are guaranteed. Again, on top of the pension tax, cutting pensions through the emergency manager, as governor himself, is wrong. It’s hurting people. It’s no way to build a strong economy.
HENDERSON: Governor, I want to give you a chance to respond to the question about democracy. You’re suspending local democracy when you send in an emergency manager. People in the state voted not to have emergency managers. How do you address that?
SNYDER: No, what they said is, we’ve had EM going back to Gov. Blanchard in 1988. There have been a lot of EM before I stated this process. In fact, I inherited a number of them. What we did was enhance their skill set so they could do their job and get out. There was a ballot proposal that said certain aspects of it people didn’t like. We listened to that. We didn’t do those things. We put something back in place so we could move forward.
Think about this: traditionally emergency managers were there way to long. So Detroit, other than the bankruptcy, the city is now running the city of Detroit. We have an emergency manager that now has left in Pontiac, Benton Harbor, Allen Park, Ecorse. It’s working, folks. We’re getting thee cities back on their feet that didn’t have an opportunity to before. Because we know how big the messes were.
I’ve asked the Congressman. If you’re not going to do things like looking at bankruptcy, a very last resort. And again, it is constitutional. A federal judge said that. I’ve asked the question is, what are you going to do to pay those $9 billion in liabilities? How are you going to have a budget where you have 60 percent going to liability costs?
HENDERSON: Very quickly, Congressman.
SCHAUER: We’ll go back to a hypothetical if I had been governor without an emergency manager, that would not have changed the books for the city of Detroit. I’m not questioning whether the city of Detroit needed to go bankrupt but I would have personally led rather than having an unelected, unaccountable person do it and I would never have thrown Detroit city pensioners, police officers, firefighters under the bus. That hurts them.
SNYDER: We didn’t leave them under the bus. We did the grand bargain, and I want to thank the bipartisan support of the Legislature to work with the foundation community. Retirees did take cuts but we minimized them. I appreciate them. They ended up supporting the agreement and I respect them for their great role in this settlement.
Flint has a pending lawsuit over pensions that may change the city’s course, but a recent analysis by Moody’s Investor’s Service offers the prediction that Flint will not follow along the bankruptcy path set by Detroit. Our Detroit Journalism Cooperative partner Michigan Radio has this report.
As part of the Detroit Journalism Cooperative effort, Bridge Magazine‘s Mike Wilkinson and WDET‘s Sandra Svoboda teamed up on a couple of reports about Detroit Mayor Mike Duggan’s campaign finance and fundraising strategies. They are:
Today, Detroit Free Press columnists Stephen Henderson and Nancy Kaffer examine the stories and the impact of the mayor’s nonprofit. Kaffer writes:
For the last decade, southeast Michigan politics have been absolutely lousy with nonprofits, the kind that can receive unlimited contributions but don’t have to disclose donors. And thus far, the track record for politicians and those kinds of nonprofits hasn’t been so good.
And Henderson concludes:
…these committees have one purpose, no matter how upfront their propagators pledge to be: They’re intended to operate around the law, to dance outside campaign finance and other tax restrictions, to achieve political aims. Right there, that puts them out-of-bounds in my book. We have campaign finance rules and restrictions for a reason. And we expect that public officials will conduct their business, well, in public. These committees are about undermining those expectations, ostensibly within the letter of the law, but clearly far outside the spirit of it.
Others have weighed in about what issues accompany the modern era of campaign finance. Here are two interviews Svoboda conducted in conjunction with the articles.
Here is a transcription of the Rich Robinson interview.
Here is a transcription of the Peter Quist interview.
Three years ago, only a half-dozen cities and school districts in Michigan were being run by state-appointed emergency managers. Today, 17 are in some phase of receivership. Detroit Emergency Manager Kevyn Orr filed for bankruptcy, history’s largest for a municipality. Bridge magazine writer Chastity Pratt Dawsey examines the effectiveness of the emergency manager law and how it measures up to similar laws in other states in a report for the magazine’s latest issue. She joined Michigan Radio’s Stateside program.
Michigan receivership laws are stirring contempt in fragile communities. Bridge Magazine’s Chastity Pratt Dawsey reports on Michigan’s aggressive emergency manager law, how it’s mired in litigation and what other states – notably, North Carolina and Rhode Island – have succeeded with through more proactive and inclusive approaches in distressed cities.
It’s not often we see Detroit held up as a role model — and plenty of people will disagree that the new city pension plans are anything that should be emulated — but attention paid to our city from elsewhere is something Next Chapter Detroit is always looking out for. In this case, it comes from the Charleston (West Virg.) Daily Mail in the wake of the recent revelation that municipalities in that state are about $1 billion short in funding their police and firefighter pensions.
A West Virginia tax on insurance premiums provides about $17 million annually, the Daily Mail reports. Still, the paper urges more leadership on pension funding issues, citing Detroit’s new plan:
Legislators who regulate municipal pensions must do something. But what? An agreement by unions and city officials in Detroit gives hope. Unions agreed to scale back the pension plans in the face of the city’s bankruptcy court proceedings.
The Daily Mail neglects to print the details of the plan, as NextChapterDetroit.com reported:
Terms of the new plan maintain parts of a defined benefit system but also require a contribution from current employees, which will be deducted from their salaries beginning July 14. For police and firefighters, the contribution will be 6 percent of their weekly pre-tax base salary, while non-uniform employees in the General Retirement System will contribute 4 percent. For employees hired after June 30, the contributions will be 8 percent.
But with such a lack of real conversations and initiatives about municipal reform, we thought the Charleston view was worth posting.
If it’s good for Detroit…and good — or even neutral — for Oakland County, L. Brooks Patterson says he’ll support it. But if something proposed as past of Detroit’s restructuring and bankruptcy process is to the detriment of his county, then the long-time executive tells MLive not to expect his blessing:
Here’s the rule that I laid out to my staff: If there’s a program or a proposal on the table that’s good for Detroit and good for Oakland Country then of course I’m going to support it. If there’s a proposal that’s good for Detroit and neutral to the interest of my taxpayers, then ‘Why not?’ I’ll support it. No harm, no foul. If there’s a proposal that’s good for Detroit, but injurious to my taxpayers then I’m going to fight it, then I’m going to resist it. And that’s been the rule for more than 21 years now.
Patterson, in discussing the city’s bankruptcy during a far-ranging interview with the news site, also warns Detroit Mayor Mike Duggan is enjoying a bit of honeymoon…and honeymoons end.
Read the full interview here.