Roger Fraser says Michigan's emergency manager law is 'an orderly alternative to bankruptcy'
Michigan Deputy State Treasurer Roger Fraser said his research on the effects of bankruptcy on local communities led him to talk last fall with the city manager in Ventura, Calif.
Fraser said Ventura is now a little bit less than five years into its bankruptcy experience, and the city isn't out of the woods yet.
"The relationships of Ventura with its community, with its employees, with its neighboring cities have been described by this individual as abysmal," Fraser said. "They have just been through hell trying to work their way through bankruptcy."
Roger Fraser and Brandon Jessup may not see eye to eye on Michigan's emergency manager law but they were still able to share a laugh before Monday's panel discussion.
Ryan J. Stanton | AnnArbor.com
He used Ventura as an example Monday night to talk about why Public Act 4 — otherwise known as Michigan's new emergency manager law — is a better alternative to bankruptcy for a community in financial distress.
"We would hope that P.A. 4 offers an orderly alternative to bankruptcy — that there are ways for us to work through this process and make sure that communities become viable again in a way that they're unable to accomplish by their own," Fraser said.
Fraser shared the stage with three other panelists during a 90-minute panel discussion hosted by the Ford School of Public Policy at the University of Michigan. More than 100 people were in attendance, including a number of local elected and appointed officials.
Panelists examined the impact of the state's emergency manager law on citizens, public employees, local governments and communities in Michigan.
Fraser, Ann Arbor's former city administrator, now oversees the emergency manager program as deputy state treasurer for local government services in Michigan. He sat immediately next to Eastern Michigan University graduate Brandon Jessup, who is chairman and CEO of Michigan Forward, a public policy organization working to repeal the emergency manager law.
Other panelists included Joseph Harris, the emergency manager in Benton Harbor, and Dayne Walling, the mayor of Flint and and founder of Flint Club.
Jessup disagreed with Fraser on many points, calling the emergency manager law a "naked power grab" by the state, one that presents a clear threat to democracy.
"Michigan cannot turn away from democracy in these times of uncertainty that are facing our local communities," he said, decrying the fact that emergency managers have the ability to cancel public contracts and sell off a government's assets.
Jessup used phrases like "political hammer" and "anti-democracy" when talking about a consent agreement Gov. Rick Snyder delivered to the city of Detroit last week. The agreement is an attempt by the governor to avoid appointing an emergency manager there.
"At a glance, this agreement provides a waiver of legal recourse, a $1 million severance to unelected officials and supersedes any ballot initiative that may alter the state of Michigan's EM law," Jessup said, noting that Michigan Forward and the Stand Up for Democracy Coalition submitted 226,637 signatures to the state Feb. 29 to push a public referendum on P.A. 4.
Jessup said one of the coalition's opponents, Michigan Citizens for Fiscal Accountability — which he called "a super PAC from Grand Rapids" — has formally requested to review the submission and Michigan Forward anticipates a strong challenge from the organization.
Jessup said Michigan's emergency manager law, regardless of the version, is wrong for Michigan. He called for the creation of a task force accompanied by a bipartisan commission to develop local recovery and reinvestment plans and make grants available to reinvest in core services like water, sewer and public safety in the state's largest cities.
Harris used his time on stage to argue in favor of Michigan's emergency manager law, telling how it's helped shore up Benton Harbor's financial picture.
"Ladies and gentlemen, we cannot afford to expect financially distressed local governments to reverse their declines if they are not making dramatic changes," Harris said. "Nor can we afford to expect conditions to be corrected by those steadfastly adhering to failing methods.
"I submit to you that the consequences of inaction by the state are untenable and that the state's involvement in the affairs of financially distressed local governments is imperative."
Walling talked about his experience as mayor in Flint, noting a judge recently issued a restraining order preventing Flint emergency manager Michael Brown from taking any action with regard to the city of Flint. Walling said he has concerns P.A. 4 creates an uneven playing field where appointed managers have more power than local elected officials.
He said he thinks the state needs to take action to allow local governments more opportunities to raise revenues whether that's through income taxes or sales taxes.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
KeepingItReal
Tue, Mar 20, 2012 : 2:12 p.m.
I am not necessarily in favor of an emergency manager for any city but to use the argument that it infringes on democracy is not a valid one. When the citizens of a community continously elect greedy, incompetent, and corrupt leaders they are in essence giving up their rights to be ruled democratically. The people in Detroit have elected the same people and expect things to get better. Sounds like the classic definition of insanity. Even with the threat of Gov. Snyder to send in a E.M. the leaders of Detroit still can't show good faith. They simply cannot get along. If it takes a E.M. to straighten things out then perhaps the sooner the better.
Tru2Blu76
Tue, Mar 20, 2012 : 12:51 p.m.
During the Cold War, all we heard from Republicans was that a centrally planned economy run by the state is evil and a failure. Now, after wrecking the economy with decentralized Laissez Faire deregulation, the "Great Idea" turns out to be government taking over the economy (to replace the "genius" of bankruptcy strategy). Gone too is the "excuse" used by Republicans for such a flip-flop: it was entirely Republican backed debt-peddling which created the overall attitude that "debt is good because it boosts the economy." (Stipulation: it was Ronald Reagan's policy, not that of any Democrat). To be fair: both parties have used this two-faced "magic" to redefine terms and transform one of their "realities" to another - just to escape being held responsible. Let them try honesty - it would be a refreshing change and make for actual responsible government.
Alan Goldsmith
Tue, Mar 20, 2012 : 10:51 a.m.
"And having Mr. Fraser in charge is very telling. He couldn't manage his P Card (City Funded Credit Card) at city hall and had to be rescued by the majority on council, that changed the rules after he broke the rules. Spent lavishly on dinners and travel on himself and his cronies, among other things. And he is now tell communities how to manage their money?" And no local media at all caring enough to put a major spotlight on it either. Just like Snyder's SPARK.
Veracity
Tue, Mar 20, 2012 : 4:06 a.m.
To fully understand what Benton Harbor's EM, Joseph Harris, means to the city please view the following two short video's by Rachel Maddow. http://michiganmessenger.com/48319/maddow-on-benton-harbor-efm-takeover http://maddowblog.msnbc.msn.com/_news/2012/02/13/10398925-the-silencing-of-benton-harbor-michigan
shadow wilson
Tue, Mar 20, 2012 : 3:59 a.m.
What is conveniently omitted from the opposition to e.m. laws is the rampant and cavalier nepotism, corruption and outright thievery that has occurred in almost every city/town facing em status. In Detroit years decades really of intractable crime has resulted in a mass exodus ; if the EM can restore order things will improve.
Stuart Brown
Tue, Mar 20, 2012 : 2:04 a.m.
Jessup is correct, PA 4 is anti-democratic and have severe long term negative consequences for a community like Detroit. What is at stake for cities like Detroit is not an academic question but real practical issues. For example, the biggest threat to cities like Detroit is that valuable public assets like the Detroit Water system could in be sold off by an emergency manager without any input from elected leaders or a vote of the people. Where Roger Fraiser is wrong is that bankruptcy is not the only solution to debt insolvency. For example, Ford Motor Company paid 40 cents on the dollar to creditors when Chrysler and GM went into bankruptcy protection as an alternative to Chapter 11 bankruptcy. Today, Ford is thriving which is due to being able to stiff its creditors out of the full amount due on Ford's debt. There is also an issue of fairness at stake which lies in asking why should all of the brunt of a debt restructuring fall only on residents and workers and not creditors? An unwritten assumption is that emergency managers exist to make sure bonds and debt are paid in full and the entire brunt falls on residents and workers while leaving creditors whole. Why is that fair? It's not and is patently absurd on its face. The bunt should be shouldered by all stakeholders, including debt holders!
Stuart Brown
Wed, Mar 21, 2012 : 2:50 a.m.
no flamers!, where do you get your info? The business press was speculating that Ford was at a disadvantage to GM and Chrysler because they were paying 40 cents on the dollar whereas the two crosstown rivals were completely wiping out their debt.
Sparty
Tue, Mar 20, 2012 : 12:29 p.m.
Wrong, Ford took a $5.9 Billion dollar loan from the government - the same Department of Energy program that funded Solyndra also funded other "at risk" companies like Ford. It has not been fully repaid. Check your facts next time!
no flamers!
Tue, Mar 20, 2012 : 11:27 a.m.
You are wrong in stating that Ford "paid 40 cents on the dollar to creditors" and that Ford "stiffed its creditors." As I thought everyone in American knew, Ford has paid its creditors in full, stiffed no one, and achieve its turn-around without a bailout of the government. Perhaps you confused Ford with GM or Chrysler? Same business, different companies.
Veracity
Tue, Mar 20, 2012 : 4:54 a.m.
If a municipality can not pay its bills I do not know what responsibility falls on the creditors. If enough purchasers default on their payments for purchased goods or services then that business will not remain solvent or survive.
Townie
Tue, Mar 20, 2012 : 1:58 a.m.
Fraser slinks back into town after his disgraceful performance here and spouts this kind of nonsense? Greedy freeloader who could care less about A2 and made bad decision after bad decision and now he's telling other cities what to do? And getting more of our tax money for continuing incompetence? Amazing. The Crony Machine in action.
Vince Caruso
Tue, Mar 20, 2012 : 1:51 a.m.
I would agree this is an end run around elected official in black and minority communities that have been subsidizing the elite communities for many decades. Read some history. Detroit gets $150 per person per year from the state when Bloomfield Hills et al gets $1,700 -$2,000. And having Mr. Fraser in charge is very telling. He couldn't manage his P Card (City Funded Credit Card) at city hall and had to be rescued by the majority on council, that changed the rules after he broke the rules. Spent lavishly on dinners and travel on himself and his cronies, among other things. And he is now tell communities how to manage their money? This is more of the same poor management shown by Mr. Schneider and the Republicans. More Republican Mississippizing Michigan.