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Tom Watkins

Tom Watkins

Mike Duggan:
Emergency Manager?


March 2, 2012

Now that the GOP Primary circus has left town, we can turn our attention to other not so fun issues facing our state including the on-fire question of “What’s to become of Detroit?”

Will “One Tough Nerd” Governor Snyder take the heat and appoint an emergency manager to take over Detroit?

Snyder recently gave Mayor Bing a 30 day extension to stabilize the city’s sinking ship. He does so as reports continue to leak out that the city teeters on payless paydays as municipal bankruptcy looms.

Detroit still faces imminent cash shortages and could run out of cash in mid to late April.

All this drama is playing out as the opponents of the emergency manager law, considering it unconstitutional, delivered 226,637 signatures on February 29th to the Secretary of State, hoping to halt the law from moving forward. The group needs 161,305 valid signatures out of those collected.

Assuming enough signatures are validated by the Michigan Secretary of State, Bureau of Elections to get the issue on the ballot, the law will be suspended until voters decide whether to repeal it as early as November.

Politically, having this contentious issue on the ballot will benefit President Obama and Democrats by driving up voter turn out in the November election.

Governor Snyder has defended the emergency manager law, Public Act 4, as a valuable tool to address financially struggling communities to assist them in taking action to resolve fiscal crises that they, as local officials, can’t or won’t address.

As of this writing, multiple school districts and cities across the state including Benton Harbor, Detroit Public Schools, Ecorse, Flint, and Highland Park, are currently run by an emergency manager. There are 48 additional local school districts on the Michigan Department of Educations deficit watch list.

Governor Snyder seems to be pleading with the mayor and city council to act, so he does not have to pull the trigger on an emergency manager.

The governor may want to hint that he has a bulldog waiting in the wings ready to do what it takes to fix Detroit if the city leaders don’t.

Detroit is the latest poster child of a municipality in need of emergency management. City administrations going back decades have made a sport of kicking the financial can down the road. Now they must face the point where they have run out of cans and road.

Will Governor Snyder appoint an emergency manager for Detroit?

Michigan’s State Treasurer, Andy Dillon, announced an obvious first step towards an emergency manager. After reviewing Detroit’s books, he found “probable financial stress.” For anyone paying attention, this was not news.

Now, a second step has clicked into place: A full review team appointed by the governor. Their time to review and make recommendations to the governor has been extended 30 days from February 24th.

One Tough Nerd gets an a-plus for the bright, competent, community-connected people he appointed to review Detroit’s finances and to make recommendations for next step, up to and including an emergency manager, who might trump local officials in deciding the city’s destiny.

Waiting for Superman Or A Bull Dog

Who could be appointed an emergency manager? It must be one who has the skill, guts and track record of turning around a mess decades in the making. Does such a person exist?

Governor Snyder has made it clear he wants Mayor Bing and the Detroit City Council to fix the city’s short and long-term fiscal issues. Will they? Can they?

One would think the mere threat of an emergency manager would force Detroit’s leaders to finally step up and begin to take control of their future.

Mayor Bing and the city council fiercely oppose the governor’s appointment of an emergency manager to take control of Detroit. Yet, to date they have not taken the necessary steps to address the city’s short-term cash flow problems – much less its historical structural imbalances that the respected Citizens Research Council of Michigan (crcmich.org) says are in the billions.

Detroit’s retiree legacy costs are unsustainable. Its long-term debt load exceeds $12 billion – not including interest. City officials must address the legacy costs as well as run the city more efficiently.

Where is the leverage?

By not appointing an emergency manager, Governor Snyder can rightfully proclaim the new law is a success. How? The emergency manager law works best when it is not acted upon. When you show people death, they may accept serious injury instead. The mere threat of an all-powerful czar capable of making painful decisions, ripping up union contracts, may bring recalcitrant people to the solution-seeking table.

Yet, further cuts and union give backs are just a beginning. Detroit needs the 6 R’s: Restructure, Reform, Re-imagine, and Reinvent and then Rebuild the city on Results. They can’t simply cut themselves to solvency or renewal.

What’s next?

The money from people in the know, is being bet on the financial review team appointed by Snyder to recommend a detailed consent agreement- a dashboard of sorts – with dates and specific action steps to be taken to address the unsustainable, structural fiscal issues facing the city. The agreement will spell out what needs to take place to address the problems, allowing local city leaders to make decisions – or else.

That is, the emergency manager hammer will remain.

The hammer may very well be the tenacious, tough, former Wayne County Deputy Executive and Detroit Medical Center CEO and savior, Mike Duggan. If he is appointed as the emergency manager of Detroit, “Oh no!” would be the collective scream at the Coleman A. Young Municipal Center.

Let me assure you, NO ONE WITHIN CITY HALL wants Bulldog Mike to be let off his leash. As folks outside may very well welcome his focus!

Duggan, and his wife Lori Maher, recently purchased a home in Detroit, igniting rumors of the possibility he is the emergency manager designate-in-waiting or is considering a mayoral campaign.

With Duggan as the hammer, the various parties may get serious about fixing Detroit – or he certainly will.

Certainly, Duggan would turn a Detroit turn-around into a bid for governor.

Speculation? You bet. However, rumors, speculation and anticipation will build up as the clock runs out on the future of the City of Detroit.

Tom Watkins, is a US/China business and education consultant. He serves on a number of Chinese-American business and education boards and is an honorary professor at Mianyang University in Sichuan Province and an international educational consultant to a K-12 school in Hong Zhou, China.

March 1, 2012 · Filed under Tom Watkins Tags: , , , ,

56 responses so far ↓

  • 1 diane // Mar 2, 2012 at 5:43 am

    if anything, this column shows that mike dggan might be exactly what snyder and the city of detroit need.. HIRE HIM!

  • 2 Andy // Mar 2, 2012 at 7:32 am

    This column was longer than it needed to be. Also, Mr. Watkins reveals his ignorance of Detroit politics. If (or really, when) Snyder appoints Detroit an EFM, the appointed candidate will be black, which Duggan is not. The governor may be a Republican, but he knows better than to put a white manager in charge.

  • 3 Rose // Mar 2, 2012 at 8:13 am

    Synder’s Review Team last meeting agenda

    1) Secret Subcommittee
    2) Hire Mike Duggan
    3) Tactics to avoid fed investigation

    Duggan as EM will be the cherry on top of the political corruption. McNamara Political Machine mean anything???

    Duggan is a very very BAD and SCARY choice!!

  • 4 Jim // Mar 2, 2012 at 9:10 am

    I think the Rev Martin Luther King Jr. said it best, ” A man should be judged by the content of his character == not the color of his skin.

    Interesting thoughts. Appreciate the lesson on the Emergency Manager law. Clearly, something different must be done.

  • 5 Jon // Mar 2, 2012 at 10:34 am

    Tom, I agree something needs to be done, but I don’t know if I trust Snyder. Also, Emergency Managers sucess rate is spotty, look at the mess at the Detroit School who has had a succession of EM’s. Dugan is an interesting choice, but he saved the Medical Center by selling it to a private firm. Time will tell if this is truly a success or was just a temporary bandaid. He can’t sell Detroit.

  • 6 Alice // Mar 2, 2012 at 12:13 pm

    Detroit is in the mess it is in because leaders failed to lead— over generations, decades, from former mayors, city councils, business community, state, different governors, leg bodies democrats and republicans alike.

    It will be interesting to watch if the problems are finally addressed or if this Mayor and Governor will simply paper over the problems and hope it gets bettter on its own— it won’t!

  • 7 Leroy Stephens // Mar 2, 2012 at 12:15 pm

    This is a mess that has taken years to create. Therefore, it will not be solved in a matter of weeks or months. The first step is a change in the way of thinking and think outside of the box for long term solutions not a quick fix. Good Luck.

  • 8 Mike Duggan // Mar 2, 2012 at 1:33 pm

    The appointment of an emergency manager for Detroit would be a tragic mistake, which is why I have strongly supported Mayor Bing in his efforts to avoid that outcome. Under no circumstance would I accept an appointment as the city’s emergency manager. Please leave me out of your speculation.

  • 9 Jack // Mar 2, 2012 at 1:53 pm

    I too thought it highly unlikely, as the author concludes as well that an Emergency Manager will be appointed, or if Mike Duggan would be asked to serve in that roll. It is much more likely that as is pointed out that a Consent Agreement will be the way out of the mess.

    The theme seems to be — business as usual is unacceptable and will not get the job done– these problems have been background noise for years.

    Yet, Watkins is correct, if an EM is the route to go you are going to need someone who is tough, politically astute, has a hide of a rhino, is media savey does not need or is seeking the role— and Duggan sure seems to be a good description of what will be needed.

    I would add Joe Harris the former budget director or Ombudsman now the Emergency Manager in Benton Harbor as another that fits the bill.

  • 10 jody w // Mar 2, 2012 at 2:02 pm

    .. they ought to close down the city and schools and just start from scratch. It is the only wy you will ever really fix this problem..

  • 11 mostindoubt // Mar 2, 2012 at 2:58 pm

    Is that really “the” Mike Duggan in # 8 above?

    Interesting to note he takes that politically correct denial of interest in being appointed to the emergency manager role (the politcal equilivant of seeking your neighbors wife?) yet is silent on the other suggestion of his interest in running for mayor and or Gov.

    Seems the theme of this essay is:
    * that problems in Detroit are huge and long standing
    * it is past time to stop the denial and game playing and get serious about addressing the problems
    * A major departure on is needed on how problems have historically been papered over, and not addressed
    * Snyder is giving the Mayor and City Council ever opportunity to fix their local problems
    * one tough SOB will be required to shatter the culture of denial in the city ( and county)– someone like Duggan who has a reputation for getting things done.

    There are lessons to be learned from looking what happened to the Detroit auto industry that attempted to ignore its problems. I doubt there is a bail out coming for Detroit from the State or Feds.

  • 12 Robert // Mar 2, 2012 at 6:51 pm

    Hmmm – interesting. I do believe you’re on to something!

  • 13 Richard Visingardi // Mar 2, 2012 at 8:07 pm

    I have a great deal of difficulty regarding the concept of an EFM relative to the Constitutional implications. I also have these concerns regarding elected citizens who do not have the courage to do what needs to be done. The Detroit situation is really a quandary. I don’t blame the Mayor or City Counsel for what has occurred; in fact I can’t think of a reason to point to any past elected official in Detroit. This has resulted in the same as what happened with our state. In particular, we never faced the reality relative of our “depresion” to problems with our revenue structures and ignoring real business diversification even in the late 1970s through the early 1980s.

    If an EFM will prevent bankruptcy I admit it is far better than the alternative. An EFM does not need to fully extend all of their power and may find in this instance that specific areas with “limited reach” may be sufficient. The real issue is not the cash flow problem—that is simply the immediate crisis—but rather the structural debt that is hindering Detroit in the effort to be re-born. As for the folks in Detroit, they have the spirit and residency to move the city forward.

    It is also thoughtful that Mr. Duggan stepped up and quashed any speculation of him being a potential EFM. His work at the DMC clearly shows that he has the ability in effectively and efficiently dealing with both the immediate and long term issues in a manner that serves the community interest.

    BTY: Congress is clearly the best example that is in dire need of a Czar (and perhaps a Jailer for Wayne County) :-)

  • 14 Alison // Mar 3, 2012 at 12:12 pm

    What is really clear is the problem in Detroit and in many other cities and schools are a result of lack of leadership on the part of the so called leaders at the state a dn local level going back decades.

    There comes a time when you have to stop pushing off tough decision and make em. This is the main reason I support Gov Snyder. He seems to be true to his word about fixing the problems that have been neglected for so very long.

    He will take the flak– but, he is doing the state a huge favor by standing up and fixing problems and stopping simply sweeping them under the rug.

    Stop the politics that have created the problems and fix them– once and for all.

  • 15 Butch H. // Mar 3, 2012 at 12:39 pm

    Thanks for the clear headed history lesson.

    I disagree with the emergency manager law– but, I have to admit, I do not have a good alternative. Anyone that has been paying attention knows that a number of the cities and schools under duress have been mismanaged or run for the poltically connected for years.

    Soemethings got to give— and asking for more of MY tax money is not a solution.

  • 16 jeff smith // Mar 3, 2012 at 11:26 pm

    ..he denies any interest in the heavy lifting and politically unpopular work required as an emergency manager of Detroit…. Yet appears silent on the suggestion that he is pondering a political run for the Mayor’s and Governor’s office… what’s up with that????

  • 17 pammy b. // Mar 3, 2012 at 11:28 pm

    .. agree with jeff.. me thinks he protests at 33 and a third!
    Just saying…..

  • 18 Tom W // Mar 5, 2012 at 12:29 pm

    The New York Times covers the story today:
    A Government Bailout Saved the Auto Industry, butthe City of Detroit Was Left Behind The city, which is running out cash, has to quickly stabilize its finances or the state could appoint someone to take over its budget. http://www.nytimes.com/2012/03/05/opinion/a-government-bailout-saved-the-auto-industry-but-detroit-was-left-behind.html?nl=opinion&emc=tya2.

  • 19 Tom W // Mar 5, 2012 at 6:02 pm

    Deputy State Treasurer gives candid interview on the state of the Emergency Manager in Michigan

    http://www.annarbor.com/news/former-ann-arbor-city-administrator-talks-about-new-role-overseeing-michigans-emergency-manager-prog/#

  • 20 Daniel P> // Mar 7, 2012 at 12:04 pm

    These sensible ideas should be shared with both Gov Snyder and Mayor Bing.

    The time is now to actually and truly fix what is broken Michigan.

  • 21 Board of State Canvassers Deadlocks on Michigan’s Emergency Manager Law // May 6, 2012 at 1:06 pm

    [...] this written by columnist Tom Watkins in the April 26, 2012 edition of DOME Magazine: “Assuming [...]

  • 22 Aber // Jun 17, 2012 at 11:02 pm

    If Mike Duggan becomes city manager, Detroit is done. That man is so corrupt, it makes me sick. He doesn’t care about Detroit, all he cares about is his bottom line and lining his already fat pockets. He hasn’t “saved” the DMC, ask any DMC employ, better yet ask Karmanos, ask Wayne State. He’s done so much bad for that hospital, that I can’t see it being around in 5-10 years. Mike Duggan for emergency manager would be the worst decision the governor could make.

  • 23 Robin Silverest // Mar 2, 2013 at 12:20 pm

    Get your facts straight sir! Mike Duggan turned the DMC from being in the depths of sinkhole red to a viable jewel in the black long before the sale! Christ, no company in their right mind would have been interested had this not been a FACT!

    I am a former employee who worked on several grassroots style committees Mike launched when he walked in the door. This is Mike’s talent, he knows who…and how to place talent in all the right places! Look deeper into his career–he turned SMART around in the same fashion. Frankly he’s the only person that stands a snowballs chance in turning the city around. Hands down, this is the biggest financial mess he has walked into in his career.

    So, NO…the DMC was not saved as the result of a sale. Mike’s the savior!

  • 24 Stanford // Jul 26, 2013 at 2:04 am

    here another bad decision voters in Detroit going to make, this now Kwame Kilpatrick got in there. So Detroit go and vote for Duggan, because you’re going to regret it/

  • 25 luella pullen // Jul 29, 2013 at 5:46 pm

    what is Mike Duggan going to do about the child support system in Wayne Co. because it is so bad

  • 26 Bruce Saunders // Oct 29, 2013 at 1:10 pm

    Only Michigan has EMs with total dictatorial power , in violation of this country’s Constitution. Orr could choose to eliminate the City Council, as Benton Harbor’s EM did (the 1st time in American history) or other duly-elected officials. Duggan’s duplicity about his involvement in this matter shows he’s unfit for a position of public trust.

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