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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: , , , ,

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