Detroit’s economic crisis heightens tensions

Michigan Gov. Rick Snyder has threatened the city of Detroit with a financial review that could lead to the appointment of an “emergency manager” who would have the power to make drastic changes in the way the municipality operates. Snyder, a conservative Republican, said that he was not impressed with the way in which the corporate-backed mayor, Dave Bing, is handling the ongoing economic crisis that has resulted in an over-$300-million budget deficit.

Snyder expected a request from Bing to conduct a financial review of the city, which is the first step in the appointment of an emergency manager. The emergency manager law was recently revised by the Republican-dominated state Legislature, which enhanced the previous law that was utilized in the 2009 takeover of the Detroit public schools.

The crisis has gained attention based on an Ernst & Young audit report that indicates that the city may “run out of cash” in a few months. The mayor’s office and the City Council have refused to challenge the report or the governor’s threats to appoint an emergency manager.

The majority of City Council members proposed layoffs of up to 2,300 municipal workers and further cutbacks in salaries and benefits. The mayor proposed 1,000 layoffs and more deep cuts in employee benefits.

The disagreement between the administration and the legislative body has also drawn the attention of the governor and state Legislature. Snyder says he has not received a letter requesting a review of Michigan’s largest city’s finances.

“We’re going to encourage them [Detroit politicians] to get on the same page in a constructive way. I’m still waiting to see if I get a response from either the mayor or the city council first,” Gov. Snyder told legislative correspondent Tim Skubick. (Detroit Free Press, Nov. 22) He also said that a financial review “just would start the process of asking for a preliminary review. My goal is to avoid a financial manager. I have no desire to see that happen.”

Nonetheless, in Benton Harbor, a majority African-American city in the southwest region of the state, an emergency manager, Joe Harris, was appointed earlier this year. Harris has created controversy there by essentially nullifying the mayor and City Commission’s authority in the heavily impoverished municipality.

A previous law was utilized in the 2009 takeover of Detroit public schools. The appointment of two emergency managers in the schools has not resolved problems such as massive layoffs, school closings and overcrowded classrooms that have become an even more serious problem.

Emergency manager law challenged

With the advent of the new right-wing governor and state Legislature earlier this year, thousands demonstrated outside the capital in Lansing, demanding that this law and others which attack collective bargaining for public employees be rejected. These demonstrations coincided with protests in Wisconsin and Ohio, where workers and students fought to stave off a nationwide effort to virtually cripple public sector unions.

A coalition of community organizations, civil rights groups and public officials filed suit to overturn the emergency manager law and launched a petition drive to place a referendum on the ballot in November 2012 designed to repeal these attacks. The coalition, Stand Up for Democracy, announced in late November that it had collected nearly enough signatures to place the referendum on the ballot and nullify the emergency management bill’s implementation.

Brandon Jessup of Stand Up for Democracy told the Detroit Free Press, “We’re getting very close to our 250,000 signature goal.” The newspaper noted, “Once the signatures — about 162,000 — are turned in and certified, a process that could take two months, the law would be suspended until a vote.” (Nov. 23)

It is not clear whether the existing law’s suspension would require the state to revert to the previous one. If the current law is suspended, the emergency managers in Benton Harbor, Pontiac and Ecorse would lose their special authority, such as the capacity to abolish labor contracts.

Threats against Detroit show
a national trend

If the governor and his collaborators are allowed to impose an emergency manager, Detroit would become the largest city in recent times where elected officials would not control its finances. Birmingham, Ala., was forced into bankruptcy. In Harrisburg, Pa., a dispute exists among politicians and the courts over whether insolvency should be declared. Both of these situations illustrate the profound economic crises facing cities throughout the country.

The Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs called for the public to attend its meeting on Nov. 28 to discuss this burning issue in Detroit. The coalition rejects the emergency manager law and is urging the city administration to demand the return of state revenue sharing funds — more than $200 million — from the state of Michigan.

The coalition says that there should be a halt to the payment of debt service to the banks and a request made to the federal government for a bailout of Detroit. These measures could provide temporary relief to the city, which is one of the hardest hit by the capitalist economic crisis.