Avoiding the mess

Yesterday I told you the Sunday Free Press had an article about Michigan's Emergency Manager Law. Today I was able to read it. The article featured reasons for keeping the law and for scrapping it. Here is a summary with my own paraphrase of the positions.

For: The first EM law was signed in 1990. But it was too messy. The EM had to actually (gasp!) *negotiate* with existing city gov't and unions. The process took too long and the result might be something that still didn't solve the long-term problem. The new law (the one under referendum in Nov.) gives the EM sweeping powers to git 'er done.

Against: Replacing the city gov't with someone who has sweeping powers is anti-democracy. State assistance should come in the form of consultation and education of city council and mayor.

Against: The new law allows the EM to tear up union contracts and impose new ones. It is designed to fix the problem on the backs of public employees. Holders of municipal bonds have no incentive to negotiate easier repayment plans because they see employees will have to make enough concessions that bond payments will be made in full. Bond holders are exempt from the pain. Bankruptcy would be better because it would force debt restructuring.

For: But bankruptcy court might also tear up union contracts and impose new ones. Besides, the core of the problem is almost always unsustainable employee pay, benefit, and pension costs (yeah, I know the GOP would have no problem telling Detroit cops, currently on 12 hour shifts, they're being greedy). The problem isn't too much debt.

During breaks in that long bus ride to Charlotte a month ago the situation in Detroit was explained this way. The big banks, through their sub-prime mortgage mess and the resulting foreclosure mess, sucked all the wealth out of Detroit's housing. Even if a resident didn't lose the home it lost a great deal of value. Property tax revenue to the city crashed along with housing value. Now the banks are sucking the value out of city gov't, forcing the layoff of teachers, police, firefighters, and street light repair personnel.

I'll be voting against the new EM law.

If the current EM law is repealed there is a dilemma. Does the 1990 law come back in force? Or did the new law repeal the old one, meaning there would be no EM law? Courts will decide.