Friday, April 1, 2011

How Effective Are MI Emergency Financial Managers?

Their mitts have been in Michigan cities for years. Highland Park had an emergency financial manager in 2001. Ramona Henderson-Parks reported December 14, 2001 that, as of 3 p.m. the Highland Park police department was dissolved. Wayne County Sheriff Dept. took over public safety. The city would issue municipal bonds to pay Wayne County. Pay attention here: the city would issue municipal bonds to pay for outsourcing public safety. Highland Park is in bad shape again in 2011. Mackinac Center (architects of the new Michigan EFM law) has Louis H. Schimmel on board. He is credited with being a municipal bond expert. He negotiated the sale of Pontiac State Bank to NBD in 1988 while employed by Pontiac State Bank. Pontiac is another Michigan city with an EFM in place, and the police department has just been dissolved. Schimmel was appointed under Public Act 72 as EFM, City of Ecorse in 1986. He privatized nearly all city services and negotiated "unique" union contracts. Did this help? In 2009 Ecorse got another EFM. Back to Schimmel: he was appointed EFM in the City of Hamtramck in November, 2000. Again, privatization and the list of think tank objectives were put in place. Did this help? City Manager Bill Cooper's plea to MI Treasury in November, 2010 to file bankruptcy was turned down later in Nov. This linked article keys the phrase "fiscal stabilization bond." City of Flint requested a $20 million FSB, approved in February, 2011. Note: bond issue. Note also that Flint is closing fire stations, and is looking at demoting 20 fire department employees, for a savings of $500,000. Flint's deficit is $17 million. City of Detroit requested a $250 million FSB in 2009. Legislation to raise the limit of FSBs to $250 million was passed in 2010. City of Detroit can maintain its municipal bond rating, and is back in the investment market. But in Hamtramck city manager Bill Cooper's letter requesting bankruptcy, he cites the City of Detroit stopping payment on its agreement for the GM plant as the reason for lack of revenue. But he insists the unions are the problem. And why is Louis Schimmel on the Legislative Council of Michigan web page? There's something here that seems off kilter. What is it? Cities that had services privatized to prevent deficits are back in deficit mode. Do emergency financial managers get performance reviews? Does the law prevent a serial unsuccessful EFM from getting another city to dissolve police, fire, school and any other union contracts? Or do failed EFMs just get kicked upstairs to a consulting job with state government?

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