Pontiac Dictator Schimmel Gets Spanked in Court

Lou Schimmel, Emergency Manager of Pontiac Michigan just got spanked by Oakland County Circuit Court Judge Rae Lee Chabot for violating the Open Meetings Act when he cut the city’s pension board from 11 to 5 members. Chabot said Schimmel’s action “looks like a dictatorship” .

Schimmel claims that he was just trying to save the city money.

Sure.

Last March, Democracy Tree investigated some of the hypocrisies of the Schimmel administration, and found he had no trouble violating his own convictions regarding unfunded mandates by taking an exorbitant salary on Pontiac’s dime, in the form of an unfunded mandate.

Under the recently repealed PA-4, and now again under reinstated PA-72, Emergency Managers are paid through an unconstitutional mandate. When PA-436 takes effect on March 27, 2013, the salaries are to be covered out of a state fund. This change took the form of an appropriation to the new law — an appropriation which by the constitution, made the new law referendum-proof.

Here’s what was discovered last March (a sordid tale of bald-faced hypocrisy): 

Unfunded manadates, the scourge of Michigan cities and schools for over three decades. The Legislative Commission on Statutory Mandates was empowered by Michigan lawmakers in 2007 to investigate this widespread unconstitutional practice. The Headlee Amendment  is unambiguous as to the illegal nature of the state enacting laws that place the funding burden on local units of government and school districts. 

This committee produced a scathing report that rebuked Michigan lawmakers for blatant and repeated violations of the constitution — in 2009 alone they legislated over $2.2 billion in unfunded mandates. The blue ribbon panel was comprised of five respected experts, included among them was Lou Schimmel, of Municipal Financial Consultants, Inc. The group made very specific recommendations on how the state can avoid any future violations of Headlee. The panel advised creating a legislative oversight “special master” to enforce the provisions of the amendment and thereby protect our cities and schools from unfunded mandates. 

The conclusion was clear:  unfunded mandates were a major cause of fiscal stress on local units of government in the State of Michigan. 

Fast forward to early 2011 when Public Act-4, The Emergency Manager Bill, was signed into law by Michigan’s Gov. Rick Snyder — that’s when a joke of sorts started making the rounds. At that time it became widely known that the training program for Emergency Managers (EMs) was a short 12 hour course, a day and a half, with lunch, that cost only $175.00. The law requires an EM to possess a paltry five years of unspecified “business” experience to run a city or school district and earn a generous salary of up to $250,000 plus benies. (This begs the question: Does that mean the guy with all the facial piercings at the Taco Bell drive-up qualifies? He’s been there quite a while.)  But, that’s not the “joke”.  No, it was what everyone said upon learning those facts: “I want that job!”  Who can blame them, it does sound like a pretty sweet gig.

At about the same time that Schimmel was decrying the horrors of those unconstitutional unfunded mandates, he also became the Director of Municipal Finance at The Mackinac Center for Public Policy. While in that position he conducted a fiscal analysis of the City of Pontiac in which he advocated for the privatization of much of their services as a solution to their financial woes, much of which were directly caused by the burden of unfunded mandates. Then in early 2011, through his position at the Mackinac Center, Schimmel started lobbying newly inaugurated Governor Synder for strengthening the powers of the old Emergency Financial Managers found under Public Act 72 of 1990. Schimmel called for a “far more powerful”  EM — he wanted to see local dictators in Michigan cities, especially Pontiac. 

Nine months later, Lou Schimmel was coronated as the all-powerful dictator of the City of Pontiac, with a salary of $150,000, plus benefits and full staff — all paid for through an unfunded mandate. Public Act-4 was very specific in its demand that all costs are to be the burden of the unit of government being seized — the law unabashedly violated Michigan’s constitution. Michigan’s legislature had become so cavalier about its addiction to unfunded mandates that they actually put it in writing that time. Most of these mandates are passive, in that the laws demand compliance without specifying the source of funding, leaving the cost burden on cities and schools who try to squeeze it out of their shrinking budgets, while ballooning their deficits. 

Emergency Manager salaries currently range between $132,000 and $225,000. The typical defense for the high salary, compared to that of the elected officials they replace, is the demanding nature of the job. In fact, some of these EMs have cried foul about public criticism of their compensation claiming they are taking a pay cut because they could earn much more in the private sector. They paint themselves as making a great personal sacrifice to do their civic duty by “helping” these struggling municipalities.

Again, sure.

Amy Kerr Hardin This article also appears in Voters Legislative Transparency Project

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