A news service for the people of Michigan from the Mackinac Center for Public Policy

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Acts of God

Don't like the EFM law? There's an alternative: Rein in government employee unions

Monday's Wall Street Journal highlighted desperate times and drastic actions taking place in Detroit, where Mayor Dave Bing and Detroit Public Schools Emergency Financial Manager Robert Bobb continue to struggle with high-powered unions. Both seem to benefit from a strengthened emergency financial manager statute that among other things adopts a Mackinac Center proposal allowing an EFM to set aside labor contracts.

Robert Bobb recently mailed layoff notices to all of the district’s teachers. This came on top of his earlier announcement that as many as a third of the districts schools could be closed or turned over to private charters.

As a regular elected mayor, Bing lacks this sort of authority, but the mayor did signal that he is open to the idea of having such a manager appointed, perhaps because he is considered a candidate for the role. “I’m not afraid of an emergency financial manager being named because what it does is right-sizes a lot of the obstacles you have to deal with on a day-to-day basis.” Bing added in a quote that might haunt him, “With a financial manager on the scene, he or she almost becomes God and can do whatever is necessary to bring financial stability back.”

One ordinarily does not think of God in terms of municipal finance, but Bing does underscore a genuine concern about the EFM process: A lot of power is taken away from duly elected local officials and is put in the hands of one man or woman. Robert Bobb is prepared to use his authority as EFM to remake Detroit Public Schools. Bing may ultimately be in a position to reshape Detroit government without the input of the city council.

One need not be a critic of Bing, or a fan of the council, to find the prospect troubling. But there are reasons why the state has an EFM law and gives EFMs the sweeping authority that they have. The main reason EFMs are necessary is the power wielded by government employee unions. Much of that power comes from millions of taxpayer dollars that are handed to them under the guise of union dues and agency fees with no questions asked. Then there is the collective bargaining authority that has allowed unions to thwart state laws.

Government employee costs make up as much as 80 percent of local government budgets, so any serious attempt to restructure government must deal with the cost of government employees, and doing that means wrestling with government employee union officials who have “god-like” powers of their own — hence the need to equip emergency managers with broad authority to rewrite union contracts without the approval of local officials — who in practical terms may be dependent on union political support.

As much as one might respect the current Detroit mayor, a god-like Dave Bing is not the ideal system of government. For those who are genuinely worried about the powers wielded by emergency financial managers, there is an alternative: Rein in the powers wielded by government employee unions. Less union power should improve fiscal discipline, leading to fewer financial emergencies, and fewer fallible mortals being given god-like powers.

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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