Sugar Law Center for Economic & Social Justice
Since March 2011, the Sugar Law Center has been at the center of a struggle for fundamental rights in the heartland. Like Wisconsin, Ohio and Indiana, Michigan has a giant bull’s-eye painted by corporate interests over its unions, public services, and even democracy itself.
While Sugar Law is a national organization, our location in Detroit placed us at Ground Zero for one of the most outrageous current attacks on voting rights and collective bargaining: Michigan’s Public Act 4, the “Emergency Manager law.”
This antidemocratic legislation, passed March 16, 2011, empowers the governor to use communities’ financial woes as a pretext to abolish local democracy. Any municipality or school district the governor declares to be in a state of “financial emergency” can be taken over by the state, and put under the control of an unelected Emergency Manager (EM) responsible only to the governor.
EMs wield preposterous power, far beyond finances. They can tear up union contracts, take over pension funds, fire public employees, dismiss elected officials and even dissolve local governments.
The Emergency Manager agenda is narrow: balance the books and pay the bondholders.
The EMs have no mandate to provide for sustainable or stable finances, nor for the services needed by residents. No action an EM takes is subject to review by local officials or voters. They have no set term, so can remain in office indefinitely —but even if local elected officials resume governance, they are bound by the EM’s plan for two years after his or her departure.
Today, ten Michigan cities and school districts are under state control through emergency managers or “consent agreements” implemented under threat of emergency manager. Over 900,000 Michigan citizens, including more than half of the state’s African-American population, no longer have local democratic rights.
There is an emergency. It’s an emergency for democracy. And Sugar Law is working with wonderful allies to defeat this model before it spreads throughout the country.
The Lawsuit
Sugar Law’s challenge to PA-4 has benefited from the support of a team of outstanding attorneys. Our argument in Brown, et al. v. Snyder, et al. filed in June 2011, focused on four ways the law violates the Michigan Constitution:
• PA-4 suspends home rule, by giving managers power to repeal local laws, ordinances, charters and contracts.
• PA-4 effectively eliminates citizens’ rights to vote for and petition local government on matters of local concern.
• PA-4 violates the separation of powers, by allowing the executive branch and its agencies to exercise legislative duties.
• PA-4 allows the Legislature to enact unfunded mandates, by using local taxpayer dollars for such purposes as managers’ salaries and staff.
Our challenge frightened Governor Rick Snyder’s team. In August, the governor sent an “Executive Message” urging the Michigan Supreme Court to use an obscure court rule in order to shortcircuit judicial proceedings. The governor’s request for an “early determination” on the law by the Supreme Court would eliminate the “discovery” process
Mike Kononpacki
Democracy Emergency in the Heartland
First Responders
Reprinted from the Sugar Law Center Summer 2012 Newsletter FOR ECONOMIC & SOCIAL JUSTICE that occurs in lower courts. In discovery, the trial court’s fact-finding procedures would require the state to disclose emergency managers’ actions and the costs they incur. Without discovery, PA-4- authorized emergency managers do the people’s business in secret.
Sugar Law opposed this effort by the state to avoid disclosure. The Supreme Court ordered both sides to submit briefs on the question by December 14, 2011.
Today, ten months after the state’s urgent request, and seven months since the written arguments, there has been no further action by the Supreme Court.
In the meantime, the trial court in Ingham County proceeded with the lawsuit.
The judge ordered discovery, but the state continued to resist disclosing even the most basic information. In fact, even after the trial judge ruled against the state, the state appealed her decision. On June 27, the Court of Appeals ruled that the state had no obligation to provide the requested information
In sum, the state is fighting us on every possible front about the substance of the law and even the right of citizens to see how government decisions are made. And this anti-democratic attitude extends to every aspect of the law’s impact in Michigan—and beyond Michigan.
What It Means Michigan’s Public Act 4 is at the leading edge of the national movement against democracy and human rights. Its importance is all the more evident when you look at where it’s being applied, who benefits from it, and how the powers that be are stifling popular resistance to the law.
Where They Claim “Emergency” Michigan now has seven cities and three school districts under state control.
Emergency Managers are in charge in Benton Harbor, Pontiac, Ecorse, Flint and the school districts of Detroit, Highland Park and Muskegon Heights. The cities of Detroit, River Rouge and Inkster are governed by coerced “consent agreements”— the ostensibly non-EM solution that still removes authority from the elected local officials, and which the state puts in place under threat of an EM. Every one of these ten local entities is majority African- American and Latino. And under both EMs and consent agreements, conditions are deteriorating further.
Public Act 4 is an affront to the rights of all Michigan voters, not only people of color. But the law has not aroused as fierce an opposition as it should, partly because it is perceived by many white Michigan voters as a way to solve problems created by black politicians. Embedded within arguments for the law is an assumption that poor people and people of color are too incompetent or too corrupt to be entrusted with local self-government.
The reality, of course, is that the crisis results from decades of institutional racism, financial deregulation, and policies transferring wealth from the poor and middle class to the wealthy. Communities with limited resources—like wealthy communities—do sometimes suffer from officials’ failures and corruption.
But far more significant for the plight of poor and minority communities are the persistent burdens of inadequate investment, employment, education, health care, law enforcement, housing, tax policy, insurance and transportation.
The EM model aims to sell voters the corporatist argument about why government does and doesn’t work, and achieves its aims by dividing communities from their black neighbors. The effect of the model on communities taken over is to increase their disaffection and lack of belief in the system. Why vote, when elected officials are stripped of power by unelected appointees? Like poll taxes and tests 50 years ago, this law disenfranchises the poor, especially people of color. It appeases whites in the 99 percent with a sense of superiority as a substitute for actual engagement in self-government.
While Public Act 4 is presented as simply a technocratic solution to financial problems, it is in fact part of the broader national campaign of voter suppression to disenfranchise the voters most likely to question corporate oligarchy.
And Why
Public Act 4’s provisions authorizing single-handed destruction of unions might seem enough of a reason for pro-corporate ideologues to promote it.
But that is only part of the story.
The law explicitly requires that the pain inflicted by financial crisis be borne entirely by government workers and local residents, while bondholders and banks are protected from loss.
Section 18 of the law provides that EMs must maintain local services “within
The Wall Street bankers lose nothing, while workers and residents pay more every day.
Mike Kononpacki the resources available.” The very next sentence requires “payment in full of the scheduled debt service requirements on all bonds, notes, and municipal securities.”
While services depend on revenues, debt service waits for no man.
City workers lose wages, benefits and, in many cases, their jobs. City residents lose services and safety. As Michigan AFLCIOPresident Karla Swift wrote in a Detroit News commentary, “The Wall Street bankers lose nothing—while workers and residents pay more every day.”
Swift also punches a hole in the argument that union-negotiated pensions are the problem. “We are told that the massive burden driving Detroit under is pension obligations,” she writes. “Yet the Detroit Financial Review Team’s report says pension payments in 2011 were $110 million, while the city pays $600 million a year in debt service. In a fiscal crisis, we are told, promises made in a prosperous era cannot be kept—not if they’re promises to workers about their retirement. But promises made to investors are sacrosanct.” Appropriate, responsible state action when a city is in financial crisis would include exacting concessions from bondholders.
If the city were allowed to negotiate an orderly restructuring of its debt—such as bankruptcy—creditors would have to accept later or lower payments than they would like. But the Michigan law and the governor will not allow either municipal bankruptcy or any other means of exacting sacrifice from bondholders. Only workers and residents have to take less…and less…and less.
As Wall Street banker (and Herbert Hoover’s Treasury Secretary) Andrew Mellon said, “In a crisis assets return to their rightful owners.” Meaning, of course, people like him.
Their Goal: Make Resistance Futile Sugar Law’s court challenge is not the only effort to get rid of PA-4. On February 29, a statewide coalition submitted more than 225,000 petition signatures to Michigan’s Secretary of State to put repeal of the Emergency Manager law on the November ballot. Since the state’s election law requires only 161,305 signatures to authorize a repeal referendum, the thousands of committed campaign volunteers celebrated. The law would have to be put to the voters.
Or so it seemed—and so it would have gone in a society ruled by law. In fact, state law provides that once a law has been certified for a repeal referendum, the law is suspended until the vote. Every EM would be off the job. But when the state Board of Canvassers met April 26, the two Republicans on the Board voted not to certify the referendum. Their rationale?
Defenders of the law invented a straw to grasp at: a bogus claim that the title of the petitions was the wrong font size.
Sugar Law joined the other attorneys challenging PA-4 to demand that the state Court of Appeals override the Board of Canvassers. Various procedural twists and turns by the Court of Appeals have extended the process, but as of this writing, we expect that Michigan voters will have the chance in November to repeal PA-4. The tortuous process and delays in certification, however, mean that the EMs are keeping their authority for the time being. And with every week—every day—they rule, these technocrats are doing more to dismantle public services and destroy community engagement.
As Michigan Goes, So Goes the Nation?
The scheme in Michigan to replace local democracy with rule by corporate consultants is just one part of a larger plan to bust unions, dilute democracy, and roll back every advance of the Great Society and the New Deal—even the Progressive Era. The magical “manager” model—the so-called solution of intractable budget problems at the expense of workers and residents—has its sights on the rest of the U.S.
In Pennsylvania, legislators have changed the state’s laws to restrict aid to financially stressed communities and prohibit restructuring of debt through the bankruptcy process or other pressures on bondholders. They appointed a financial “receiver” for Harrisburg, the state capital, which carries hundreds of millions of dollars in debt as a result of a failed incinerator deal. The result of this punitive plan, as city councillor Brad Koplinski put it, would be full payment of “everyone on Wall Street,” while “the taxpayers would be left holding the bag.”
In Indiana, meanwhile, a version of PA4 takes effect in July. As in Michigan, reductions in state funds for cities and school districts are driving local fiscal crises. As in Michigan, state legislators have used local distress to justify a law enabling shredding of union contracts, firing of public employees, and elimination of local elected officials’ powers. So far, Indiana’s law is Michigan-lite, because an EM is appointed only as a condition for receiving emergency funding from the state. But given the current law’s overwhelming approval by legislators (96-0 in the state House, 48-1 in the Senate), a tightening of the screws will not be hard to get through if resistance gets in the corporate interests’ way.
Imposition of emergency managers must be understood in the context of the many other methods conservatives are using today to suppress democracy— especially among people of color and people in poverty. Laws requiring photo ID at the polls, state purges of voter rolls, and other obstacles are being intentionally erected to prevent widespread electoral participation.
It’s no coincidence that legislators in many states are taking up the same set of tools to consolidate power. The Michigan think tank that promoted Public Act 4’s shock-doctrine approach, the Mackinac Center for Public Policy, is part of the American Legislative Exchange Council (ALEC), a national network of “freemarket” advocates working to design and pass state-level pro-corporate laws. ALEC members, heavily funded by deep-pocketed reactionaries, have been quite effective recently in spreading their gospel: austerity for people combined with tax cuts and subsidies for corporations.
The Front Lines
When Public Act 4 hit Michigan, the Sugar Law team stepped up. Our guiding principle is the inseparable connectionbetween economic and racial justice, civil rights and civil liberties. A law that simultaneously attacked all these fundamental principles required that we respond.
The bold avalanche of corporate power unleashed since 2008 has deepened the damage wrought by Wall Street.While PA-4 served as the “perfect storm” for Sugar Law, a broader progressive movement has responded similarly to the corporatist attacks. Occupy answered with a message that put questions of class in the national conversation more clearly than at any time since the 1930s. The unions picked this up with 99% Spring, using the power of the organized on behalf of everyone.
Sugar Law Center and Michigan communities are on a front line, but it’s not the only front line and we’re not alone.
Sometimes it feels like the corporate, anti-democratic agenda is winning—but we know a lot of dedicated folks are pushing back.
Our battle here in Michigan is allied with all those around the nation who are demanding: whose city is it? whose society? whose country? In the world we are fighting for, the answer to every one of those questions is: all of ours.
Frank Hammer
STAFF
Tova Perlmutter
Executive Director
John Philo
Legal Director
Tony Paris
Lead Attorney
Patrina L. Griffin
Office Manager
James Hunter
Project Coordinator
Stephanie Vaught
Legal Analyst
Jeff Ditz
Advocacy Manager
William Goodman
Sue Marx Smock
Holly K. Herndon
Ken Briggs
Julie H. Hurwitz
Joseph Lipofsky
Jeanne Mirer
Jerome L. Reide
Sidney Simon
Mark D. Stern
Hon. Rashida Tlaib
David Whitaker
Saundra L. Williams
BOARD OF DIRECTORS SUGAR LAW CENTER FOR ECONOMIC & SOCIAL JUSTICE is a national nonprofit public interest law center, dedicated to defending the rights of working people and their communities.
We work for economic and social justice by demanding legal and moral accountability from corporations and government. When people anywhere in the U.S. face workplace or social injustice,
Sugar Law Center and its broad network of cooperating attorneys provide representation to enforce their legal rights.
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