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

The details posted nearby of recent union collective bargaining agreements signed by Muskegon Heights and Highland Park, two school districts that now are effectively bankrupt and under state receivership, are shocking and reveal why it was necessary last year for the Legislature to give expanded powers to emergency managers appointed to heal effectively bankrupt cities and school districts. Given the number of these "hit the wall" situations statewide, we can now see that the only alternative would be massive taxpayer bailouts rewarding poor performance, profligacy, short-sightedness and an entitlement mindset.

Yet this reform and others is under relentless attack by unions and their allies on the left (among them Jesse Jackson and Al Sharpton). Although opponents have cynically expropriated the language of civil rights, their actions are the self-serving defense of a status quo that everyone knows is unsustainable without much greater income redistribution from struggling businesses and homeowners to school and government employees.

With all this, government unions are attempting to divert the public’s attention away from the cancerous fiscal malpractice that for years has been eating away at budgets, by demonizing the rigorous “chemotherapy” the new emergency manager law applies to sustain the necessary functions of tapped-out school districts and local governments. Without massive tax hikes and bailouts, that is. 

Specifically, they are upset about a provision allowing emergency managers to invalidate abusive school and municipal union collective bargaining agreements.

For several decades, empowered by a state law that with very few exceptions forces cities and schools to negotiate with politically powerful unions practically no matter how unreasonable their demands, budgets have been eaten away by collective bargaining provisions that all but guaranteed eventual fiscal collapse. (To be fair, a still mostly unreformed pension system imposed by the Legislature increasingly shares the blame.)

Incredibly but perhaps not surprisingly, school contract provisions like those in Highland Park and Muskegon Heights are not unusual for Michigan schools. It’s no wonder these and some other districts are in a virtual state of bankruptcy, despite stunningly high levels of tax-funded revenue.

Yet for some reason, media stories about these basket cases rarely, if ever, mention the years of fiscally abusive practices that brought about their inevitable collapse.

This journalistic invisibility, plus institutional disinformation makes it harder for the public to connect the dots between the past abuses, the current fiscal collapses, and the need for strong medicine to fix them.

Sadly, this makes voters more vulnerable to cynical union-funded propaganda, and ballot campaigns intended to reverse recent reforms. If successful, taxpayers should be prepared to pay higher taxes for fewer services provided by more richly compensated government and school employees.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.