This week in Emergency Managers…
The Hamtramck City Council voted to accept an Emergency Manager over the three other options under the law, which included Chapter 9 bankruptcy, a consent agreement, or a neutral evaluation process. The city of 22,000 residents will now await the Department of Treasury’s selection of overlord. They found themselves in fiscal crisis for all the typical reasons — rising legacy costs, such as retirement and healthcare, and a loss of manufacturing base which in-turn adversely affected their revenues. The city’s deficit is estimated to reach a threshold in excess of the 5 percent of its general fund — one of the triggers for the new law. In the case of Hamtramck, the deficit will only be about $3.3 million, a relatively small sum which may make the expense of the emergency management apparatus appear a rather costly “solution“. Mayor Karen Majewski told the Detroit Free Press:
“These are problems most cities are having. Until the state looks seriously at the mechanism in which municipalities are funded, we are going to see more and more cities go through this.”
Detroit’s Emergency Manager, Kevyn Orr, met with residents last week to “discuss” his plan for the city. Which included tough talk about defaulting on much of the city’s debt, with public retirement funds in his cross-hairs. The new emergency manager law required Orr to hold this public meeting as a (false) show of transparency. Although many were locked-out of the building and one reporter was physically tossed out. MLive reported the following:
Reuters reporter Steve Neavling was recording video of the exiting crowd and the physical removal of another reporter when a Wayne State police officer forcefully pushed him out of the building, sending him sprawling to the ground.
“I wanted to make sure it was done in a civil manner… and the guy literally throws me through the door,” Neavling said.
So much for transparency.
Those that did gain entry learned that part of Orr’s proposed plan includes privatizing the Detroit Water and Sewer Department, a move that concerns citizens groups. MLive reports that Food and Water Watch said the following of the privatization scheme:
“This proposal will remove DWSD from democratic control, creating a clear path to privatizing a resource that should be controlled by the public… Public officials should be stewards of our water and sewer systems seeking to provide the highest quality service at the most affordable price. Leasing the department to an independent authority is irresponsible and short-sighted, and it will end up costing ratepayers across Southeast Michigan through increased bills and degraded service.”
Democracy Tree predicted a hostile takeover of the DWSD back in March when, in a suspiciously timed move, U.S. District Judge Sean Cox abruptly terminated his oversight of the Detroit Water and Sewage Department, one day before Orr assumed his expanded powers under the replacement Emergency Manager law. (Emergency Financial Managers had been operating under the old 1990 law, PA -72.)
DWSD had been under court oversight for 35 years due to previous EPA violations, and suddenly we were expected to believe that mere hours before Orr stepped-up to the throne, the public utility was able to function on its own.
Democracy Tree reported earlier this year that the future of the DWSD was possibly in the hands of an Emergency Manager, although DWSD is not directly run by the City of Detroit, their board foresaw a forcible takeover of the public utility under the guise of the EM law, for the purpose of privatizing all or portions of the utility. Removal of the long-standing court oversight eliminated the possibility of confusion over the question of authority.
Well, now it’s happening.
Amy Kerr Hardin