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

Ecorse: Regaining Control

Taxpayers benefit from emergency manager actions

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Ecorse has struggled since 1986 with public officials whose interests weren't always focused on the city, and with chronic overspending.

In 2009, former Gov. Jennifer Granholm selected Joyce Parker as Ecorse's emergency manager. Parker helped privatize most services, restructure the city's debt and renegotiated union contracts when she could. The city went from spending $5 million more a year than it took in, to escaping bankruptcy. "She has been a savior for our city," said city resident William Holmes.

While some say pushing elected officials aside so an outside can run the city sounds like an extreme idea, in Ecorse it has meant regaining control of a situation that wasn't sustainable.

The city of 9,300 residents had a deficit that was 50 percent more than its annual operating budget.

Parker, who had worked in unelected city management roles in six cities over three decades, hadn’t seen anything quite like Ecorse.

"No one was watching the budget, how much was being spent," she said. "The city was spending $4.5 million to $5 million [more] every year than what it was bringing in."

She ordered an audit, determined what services city taxpayers valued most, and got to work. She also saved the city money by restructuring debt, settling lawsuits and managing the public works department in-house. 

And she tackled the city’s payroll, which proved to be an especially tough job.

"It’s difficult going from 5 percent increases every year to maybe no increases for the next  three years, or taking the cut in pay," Parker said.

She also faced huge resistance from government unions, particularly those representing police and firefighters.

"I wasn’t able to reduce salaries; not able to reduce benefits," she said. "I wasn’t able to change any working conditions under the contract, things of that nature."

The contracts eventually expired, but Parker couldn't get anyone to the bargaining table.

The contracts enabled workers to easily ring up overtime. One year, the overtime bill for 32 employees was half a million dollars.

Then, she caught a break.

In 2011, Michigan passed Public Act 4, which redefined the emergency manager law and gave Parker and other emergency managers the power to set aside union contracts.

Parker made changes that benefited the taxpayers — not the government unions. Changes in the police and firefighter contracts alone saved Ecorse $1 million a year — one-tenth of the city’s budget. 

Union members are not happy with the changes.

"We did not put the city in that position," said Mark Wilson, from the fire department union. "If you look at other cities, we were 13 percent of the budget and they still cut us."

City administrators question that percent. 

Now Parker is trying to combine police and fire service into a single public safety department, where staffers would do both jobs. She says this will allow for more officers to be on duty at the same time. The firefighters are skeptical.

"What’s going to happen when someone sets a house on fire and someone robs a bank? Where are the cops going to be at?" asks Ken Cobb, an Ecorse firefighter.

While the changes are difficult, Parker is hopeful that employees — like taxpayers — will appreciate the benefits of a solvent city. Bankruptcy would be even worse.

A municipal bankruptcy could hurt the city’s bond rating, causing more trouble, said Mackinac Center Adjunct Scholar Michael Hicks.

“You’ll pay more for water and sewer projects; more for infrastructure improvements," he said. "Bond ratings may or may not drop precipitously, but it’s not going to help the bottom line."

And bankruptcy could be ugly in other ways.

"When you consider bankruptcy, generally you may come in [and] sell all the city’s assets," Parker said. "You don’t really think about service delivery as much."

Investors have taken notice of the turnaround in Ecorse.

A private developer is rebuilding subsidized housing units at his own expense.

A local church is winning grants for community projects like a senior housing center.

And, the city has renewed a friendship with the city's largest taxpayer, U.S. Steel, Parker said.

Meanwhile, the Ecorse City Council remains on the sidelines.

City Councilwoman Brenda Banks said she "can’t say" whether "it’s been good or bad."

"It’s been interesting," she said. "We have had no say but we now have a balanced budget for the next two years and that is good."

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See also:

Local Government Stories

A City At the End of Its Rope

Benefit Costs Sunk Benton Harbor's Finances

Do We Let Unions Bankrupt Governments? - What the fight over Public Act 4 is all about

Commentary: Contracts Show, Manager Law 'Chemo' for Cancerous Fiscal Abuse