Michigan is Burning: Benton Harbor and Emergency Financial Management

There’s something fishy in Michigan.  I just heard of Benton Harbor for the 1st time from a friend last night.  He had seen a report about this while watching his beloved Rachel Maddow; I have since made an effort to triangulate my sources somewhat on the State of Michigan’s initial use of augmented powers to manage financially-stressed municipalities.

In case you haven’t heard, the State of Michigan passed a bill granting Governor Rick Snyder broadened powers to declare a municipality “financially stressed.”  Emergency financial managers have existed in Michigan for some time; they can be appointed to oversee the finances of cities and public schools that chronically face large deficits.  The modified law allows emergency financial managers–appointed at the Governor’s discretion–to suspend public employee contracts, suspend the authority of public schools and local governments to pass laws, and even abolish the jurisdictions they oversee completely, nullifying local democracy by fiat in areas so-targeted.  The law passed around the time of the state budget, which included $1.8 billion in business tax cuts paid for with cuts in spending on public schools and local government assistance, and–to the Liberal Ironist’s knowledge unmatched even by the gall of Wisconsin Republicans–tax increases on senior citizens and a $250 million tax increase on the poor.

To be fair, there’s no denying that some Michigan cities and school districts are financially-distressed.  It’s worth mentioning that Michigan was the only State in the country to lose population over the course of the past decade.  Population loss among many Michigan counties both urban and rural suggests that this decline is distributed around many parts of the State; however, there is no question that it is the population loss from some of Michigan’s biggest cities that contributed to the State’s overall demographic collapse.  Detroit, which 40 years ago had about 2 million residents, dropped to an official 2010 Census count of 713,777.  Reflecting a weird symmetry with the hollowing-out of the auto industry’s employment base in the region, Detroit has declined to the population it had 100 years ago, in 1910.  The city lost 1/4 of its population in the past decade, or an average of 1 person moving out of Detroit every 22 minutes for 10 years.  The State of New York has appointed financial managers for some financially-stressed school districts and local governments, famously for Nassau County, 1 of the wealthiest suburban counties in the United States which had chronically failed to collect the taxes and fees needed to pay for its large bureaucracy.  Furthermore, consolidation of city and county services has been a positive experience in previously depressed or poorly-financed cities such as Rochester, NY or Nashville, TN.

It is against this backdrop of this argument that Governor Snyder has made his inaugural use of his augmented powers of municipal financial restructuring.  Benton Harbor may serve as the demonstration case for just what the Governor can do with these powers, as “Emergency Financial Manager” Joseph Harris has now suspended the powers of the city government.  The only powers that remain in the hands of the elected city council for the foreseeable future are the powers to call meetings to order, adjourn said meetings, and to approve the minutes of said meetings.

Naturally, under the circumstances there won’t be much for the city council to discuss during these meetings other than outrage at the stripping of their regular powers by their new financial czar.

In an upcoming post, the Liberal Ironist will address the Benton Harbor emergency financial management case and the debate on whether State receivership of this impoverished former factory town represents a radical means of recourse for these municipalities, a case of laizzes-faire ideology run amok, or simply a prelude to a spectacular case of official corruption.  This is a question worth getting right, because it is hard to deny that the Michigan Governor’s new emergency financial management powers over cities are draconian.  What remains, the Liberal Ironist would hope, is the prospect of city consolidation with its surrounding suburban county, a measure that can centralize planning initiatives and better-distribute financial resources for old industrial cities; several Midwestern cities may face a choice between local government consolidation and the spectacle of their slow-moving abandonment, a surreal development for the 21st century.


2 thoughts on “Michigan is Burning: Benton Harbor and Emergency Financial Management

    1. liberalironist Post author

      I should clarify something: In an upcoming entry on Benton Harbor I plan to discuss the details of this emergency financial management case itself. I am familiar with emergency management of local governments or agencies from New York, where I have seen it done several times–most-recently in Nassau County, both one of the wealthiest counties in the country and unable to balance a budget because of truly bizarre levels of corruption by the now-attenuating Republican political machine there. The big question is who will benefit from the use of these extensive emergency financial management powers now assumed by the State of Michigan. When you consider they include the power to abolish local jurisdictions, these powers are pretty extensive. (That, at least, sounds to me like “a radically new or unprecedented affront to local democracy”!) Since Benton Harbor has gone under State receivership under the new law, this could be a demonstration case of sorts for just what Michigan Republicans are trying to do.

      In any case, we shouldn’t assume that just because Michigan was the only state to lost population during the Aughts that there are no economic (and correspondingly political) opportunities to be had; there is always someone who stands to gain from radical economic change, just so long as there is an economy.


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