State Power Over Municipalities: Detroit’s Financial Emergency

By: Addison Pierce

State government power questioned under new emergency financial manager law in Michigan.  In December of 2012, Michigan Governor Rick Snyder signed into law Public Act 436.  Enacted in direct response to a voter referendum in November that struck down the state’s Emergency Financial Manager Law (PA 4), a cornerstone of Snyder’s Reinvent Michigan Platform, Public Act 436 reestablished the state government’s power to declare a state of financial emergency in Michigan municipalities upon adverse findings during a financial review.  Unlike PA 4, however, this new law was passed with an appropriation measure.  Under state law, this measure makes the new law referendum proof.  While the measures under PA 4 have been invoked in others cities in Michigan, no city was seen as more of the target of PA 4, now PA 436, than Detroit.  Now that Snyder has completed the review, based on Treasurer Andy Dillon’s finding, an emergency manager has been named. On March 14, 2013, Snyder appointed Kevyn Orr as Detroit’s Emergency Financial Manager.  This appointment brings hope to many in Michigan, as Orr was one of the lawyers at the helm of Chrysler’s bankruptcy in 2009.  With all this the good news, it is important not to lose sight of the final hurdle left for Snyder, a potential battle in the court room led by the entrenched Detroit City Council.

The question the court will face, which they had already addressed under PA 4, is whether the state government has the power to enact PA 436.

The rhetoric coming from the city leaders in Detroit is all too familiar when their lavish jobs are on the line.  Detroit City Council President Charles Pugh, echoing his campaign slogan of “new leadership and a new vision,” argues, “somebody’s got to show leadership, and if [Snyder] won’t do it, then [the city council] should.” (http://www.wxyz.com/dpp/news/local_news/investigations/he-preaches-transparency,-but-charles-pugh-clams-up-when-asked-about-secret-fund, http://www.freep.com/article/20130305/NEWS01/130305062/Detroit-City-Council-President-Charles-Pugh-Gov-Rick-Snyder-alternative-emergency-financial-manager?odyssey=nav%7Chead) .  As warm and fuzzy is a notion of real leadership from Detroit’s City Council, there is little merit to Pugh’s accusation that the law is beyond the power of the state government.  (Not to mention Pugh’s own notions of leadership seem questionable as his Pugh and You Fund was under investigation for misappropriation of campaign funds; See link above).  Others have been offering similar meritless arguments.  A blogger at the Daily Kos exclaims, “Gov. Snyder’s plan is the same kind of flagrantly undemocratic ‘emergency rule’ used by military dictators to oppose any semblance of democratic opposition to their policies.”  (http://www.dailykos.com/story/2011/03/08/954169/-Michigan-Governor-Seeks-Emergency-Powers).  In her usual fashion, MSNBC’s Rachel Maddow also missed the buck explaining, “that Michigan Republican Governor Rick Snyder is pushing a bill . . . using shock doctrine tactics to create a dystopian government.  Synder’s [sic] bill not only goes after collective bargaining rights, but does in fact seem to represent the Republicans’ final solution to killing democracy. . . .”  (http://www.politicususa.com/rachel-maddow-michigan.html).  Not unexpected, aside from the any-thing-Republicans-do-is-wrong political arguments, Maddow also fails to point to a constitutional argument against the legislative package that is PA 436.  Why is the response all political name-calling and nothing of substance? Quite simply, there is little substantively to be said.

Starting with the decision in McCulloch v. Maryland, the Supreme Court of the United States has exemplified the fact that the states exist as a collection of people.  Just as the people of the State of Maryland had no right to infringe on the people of the United States collectively, the people of a city have no right to infringe on the rights of the people of the state collectively.  Many years later, the court expanded this holding in Hunter v. Pittsburg when it held that city governments existed only as “convenient agencies for exercising … such powers as may be entrusted to them” by the state.  The court went on to hold that, “the state may modify or withdraw all such power, may take without compensation such property, hold it for itself, or vest it with other agencies, expand or contract the territorial area, unite the whole or part of it with another municipality, repeal the charter and destroy the corporation … with or without the consent of the citizens, or even against their protest.”

In other words, a city exists as the state sees fit, with only those powers entrusted by the state.  As the state is the collective being of all the people in its borders, for one city’s people to challenge the will of the state government, is to assert a right that does not exist.

With this mind, PA 436 is hardly a “Republican attempt to kill democracy.”  Unless Maddow and friends think following the constitution, rather the Supreme Court’s interpretation of the constitution, is somehow un-American?  Aside from the political jabber, the main substantive challenges to the law seem to be the notion that the state government can dissolve local governments, smash union contracts, and merge city services—all with no consent of the people of the city. However, as Hunter made clear, people live under the state government, and the city exists only as a convenience.  The idea that the takeovers are without consent is baseless.  Not only do the people of the city have elected representatives in the state house and senate, they elect the governor.

What this means for Snyder is that a challenge by the city council to the state’s takeover is likely to die quickly in the courtroom; the same fate other cities in Michigan have faced. With $327 million in deficits and over $14 billion in debt, the emergency manager will finally be able to re-chart Detroit’s course.  If the city council has a problem with it, the ballot boxes open up in 2014.  Until then the city council will have few options.  An assertion of power by the state may not be welcomed news for a city council often drunk on its own power, but a power grab is hardly un-American, and in this case, undeniably constitutional.  Perhaps the council should follow Mayor Bing’s leadership, and consent to the take over as it is high time to “stop ‘BSing ourselves’ and work together to move the city forward.”  (http://www.detroitnews.com/article/20130306/METRO01/303060399/Bing-will-not-appeal-EM-residents-gather-voice-opposition-law?odyssey=tab%7Ctopnews%7Ctext%7CFRONTPAGE).

Sources:

McCulloch v. Maryland, 17 U.S. 316 (1819)

Hunter v. Pittsburg, 207 U.S. 161 (1907)

http://www.wxyz.com/dpp/news/local_news/investigations/he-preaches-transparency,-but-charles-pugh-clams-up-when-asked-about-secret-fund

http://www.freep.com/article/20130305/NEWS01/130305062/Detroit-City-Council-President-Charles-Pugh-Gov-Rick-Snyder-alternative-emergency-financial-manager?odyssey=nav%7Chead

http://www.dailykos.com/story/2011/03/08/954169/-Michigan-Governor-Seeks-Emergency-Powers

http://www.politicususa.com/rachel-maddow-michigan.html

http://www.detroitnews.com/article/20130306/METRO01/303060399/Bing-will-not-appeal-EM-residents-gather-voice-opposition-law?odyssey=tab%7Ctopnews%7Ctext%7CFRONTPAGE

http://news.yahoo.com/detroit-city-council-appeal-emergency-manager-174700720.html

http://www.reuters.com/article/2013/03/10/us-usa-detroit-emergency-idUSBRE9290FC20130310

http://www.wxyz.com/dpp/news/governor-rick-snyder-signs-new-michigan-emergency-manager-bill-into-law

http://www.huffingtonpost.com/2012/12/27/new-emergency-manager-law-michigan-rick-snyder_n_2322722.html

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