Viewer - Live chat on emergency financial manager law referendum

Live chat on emergency financial manager...

Friday September 28, 2012

10:58

Jonathan Oosting:

Hi everyone. Jonathan Oosting here with MLive.com. We're getting set up and prepared for what we hope it going to be a great conversation about the emergency manager law and referendum.

Friday September 28, 2012 10:58 Jonathan Oosting

10:59

[Comment From State Rep Al PscholkaState Rep Al Pscholka: ]

Hi, State Rep. Al Pscholka here.

Friday September 28, 2012 10:59 State Rep Al Pscholka

10:59

[Comment From Bert JohnsonBert Johnson: ]

Good morning.

Friday September 28, 2012 10:59 Bert Johnson

11:00

Jen Eyer | MLive.com:

Feel free to start posting your questions and comments, readers. We'll post comments as they come in, but we'll try to post the questions in order to make this easier to follow.

Friday September 28, 2012 11:00 Jen Eyer | MLive.com

11:00

[Comment From Tom IvackoTom Ivacko: ]

Hello, Tom Ivacko here

Friday September 28, 2012 11:00 Tom Ivacko

11:00

[Comment From Meegan HollandMeegan Holland: ]

Hi everybody. Welcome to our chat with Sen. Bert Johnson and Rep. Al Pscholka about Proposal 1, the emergency manager law referendum.

Friday September 28, 2012 11:00 Meegan Holland

11:00

Jonathan Oosting:

Welcome, gentleman.

As background for readers, State Rep. Al Pscholka (R-Stevensville) sponsored the legislation that became Public Act 4 and remains a big supporter of the law. His district includes Benton Harbor, which has been in receivership since 2010.

Friday September 28, 2012 11:00 Jonathan Oosting

11:00

Jonathan Oosting:

State Sen. Bert Johnson (D-Detroit) is a vocal critic of Public Act 4. His district includes Highland Park, where an emergency manager recenly hired a charter operator to run the public school system, and part of Detroit, which is operating under a consent agreement with the state.

Friday September 28, 2012 11:00 Jonathan Oosting

11:01

Jonathan Oosting:

Tom Ivacko is the administrator and program manager of CLOSUP at the University of Michigan's Gerald R. Ford School of Public Policy, which this week published results of a spring survey showing that local officials across the state are sharply divided on Public Act 4 and the powers it affords state appointees.

Friday September 28, 2012 11:01 Jonathan Oosting

11:01

[Comment From Meegan HollandMeegan Holland: ]

I'll be moderating the chat, with the help of Jen Eyer, MLive's community engagement specialist.

Friday September 28, 2012 11:01 Meegan Holland

11:01

[Comment From Bert JohnsonBert Johnson: ]

Good morning.

Friday September 28, 2012 11:01 Bert Johnson

11:01

[Comment From State Rep Al PscholkaState Rep Al Pscholka: ]

I know folks like to call it the Emergency Manager law, the name of the legislation is the Fiscal Accountability Act.

Friday September 28, 2012 11:01 State Rep Al Pscholka

11:02

[Comment From NDFan10NDFan10: ]

My first question, and biggest concern, is what happens if Proposal 1 gets voted down, that is, Public Act 4 is repealed? What do we do with financially struggling communities then?

Friday September 28, 2012 11:02 NDFan10

11:03

[Comment From Meegan HollandMeegan Holland: ]

Welcome NDFan10. Great question!

Friday September 28, 2012 11:03 Meegan Holland

11:03

[Comment From State Rep Al PscholkaState Rep Al Pscholka: ]

In some states, the alternative is

Friday September 28, 2012 11:03 State Rep Al Pscholka

11:04

[Comment From State Rep Al PscholkaState Rep Al Pscholka: ]

In some states, the alternative is Chapter 9 bankruptcy, which is probably the most undemocratic choice. A federal judge can rip up contracts, sell assets, and strip services. Plus all taxpayers would be on the hook for the liabilities.

Friday September 28, 2012 11:04 State Rep Al Pscholka

11:04

[Comment From Kris HKris H: ]

To SR Pscholka, what is it about democratically elected government that you believe to be incompatible with addressing financial concerns; particularly when most of the concerns have resulted from Michigan being in a single-state depression and not due to mis/malfeasance.

Friday September 28, 2012 11:04 Kris H

11:05

[Comment From Bert JohnsonBert Johnson: ]

There always has to be a provision in place to safeguard against insolvency. I am not against the state and the local community working together to create a viable plan. A lot of what is happening today with Emergency Managers, though, rests with what they think is best and is unproven.... Experience with this law indicates that the cities and school districts that have come under control of an EM have not improved as a result of that oversight.

Friday September 28, 2012 11:05 Bert Johnson

11:06

[Comment From Meegan HollandMeegan Holland: ]

Thanks Kris H, for the question. Rep. Pscholka is typing away!

Friday September 28, 2012 11:06 Meegan Holland

11:07

Bert Johnson:

My point is, let's not make bankruptcy the boogeyman it is not.

Friday September 28, 2012 11:07 Bert Johnson

11:08

[Comment From State Rep Al PscholkaState Rep Al Pscholka: ]

There is an easy way to avoid this legislation - pay your bills, don't take on huge debt, live within your means. That's 99 percent of the governments in the state. For others, we need an early warning system and the tools to help temporarily. That's the intent.

Friday September 28, 2012 11:08 State Rep Al Pscholka

11:08

State Rep Al Pscholka:

Ecorse has improved, has a balanced budget, we have seen progress in Benton Harbor, and reforms in Pontiac, Flint, and DPS have saved taxpayers 100 million.

Friday September 28, 2012 11:08 State Rep Al Pscholka

11:08

[Comment From lcannon1lcannon1: ]

To senator Johnson. What would be an alternative to this problem?

Friday September 28, 2012 11:08 lcannon1

11:08

[Comment From Kris HKris H: ]

Point of record: According to the Federal Courts website, a federal judge cannot force the sell of assets. http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter9.aspx

Friday September 28, 2012 11:08 Kris H

11:09

[Comment From Frank JoyceFrank Joyce: ]

It is not the case the bankruptcy is more undemocratic. Chap 9 of the federal bankruptcy code compels the involvement of local elected officials. Pa-4 explicitly excludes them from the process. Further, bankruptcy brings bondholder to the table. PA-4 precludes that.

Friday September 28, 2012 11:09 Frank Joyce

11:09

[Comment From Bert JohnsonBert Johnson: ]

Additionally, in bankruptcy court, the immediate goal is to stop the bleeding and not simply to sell off assets. There has been enough evidence of corporate and private personal bankruptcies to suggest that entities can emerge from bankruptcy healthier than when they started.

Friday September 28, 2012 11:09 Bert Johnson

11:10

Bert Johnson:

The results in any of those entities, Rep. Pscholka, are yet to be proven. Particularly in DPS, where there have been two Emergency Managers, these results have not been seen. Indeed, we have seen a ballooning deficit, corruption and cronyism.

Friday September 28, 2012 11:10 Bert Johnson

11:10

[Comment From RobRob: ]

Bankruptcy is the boogeyman, it is one single judge making the decisions. While the EM law is tough the people of the State of Michigan can hold our elected officials to account for what the EM chooses to do.

Friday September 28, 2012 11:10 Rob

11:10

State Rep Al Pscholka:

Communities that have gone through it, like Vallejo California have seen 12 hours of police protection a week, and five years of legal bills. Not good.

Friday September 28, 2012 11:10 State Rep Al Pscholka

11:10

[Comment From Lucille B.Lucille B.: ]

What financial burden does bankruptcy shift to the taxpayers?

Friday September 28, 2012 11:10 Lucille B.

11:11

[Comment From Stephen BoyleStephen Boyle: ]

I believe the opposite - that the loss of democratic process happens with an emergency manager. The process of bankruptcy is to restructure systems and gain debt forgiveness in the process. Public Act 4 has no debt forgiveness, and actually increases municipal obligations if assets are not surrendered.

Friday September 28, 2012 11:11 Stephen Boyle

11:11

Bert Johnson:

An alternative is a law that allows for cooperation between the State Treasurer's office and the local elected officials to make decisions in the best interest of the city or school district going forward. It should be noted that the Representative and the Governor crafted this legislation without input from one Democratic Senator or Representative, when the vast majority of us represent areas that have been taken over... our input can be valuable.

Friday September 28, 2012 11:11 Bert Johnson

11:12

[Comment From B.H. TurnaroundB.H. Turnaround: ]

Part of the problem in lack of improvement is the lack of elected officials and efm's working together. Both sides are at fault and the war will not improve the bottom line. B.H. cannot improve with the verbal war continuing back and forth.

Friday September 28, 2012 11:12 B.H. Turnaround

11:12

[Comment From Stephen BoyleStephen Boyle: ]

Detroit has police working 12 hour shifts. When Mayor Bing was confronted about that last night he and his staff walked out of the community meeting.

Friday September 28, 2012 11:12 Stephen Boyle

11:12

Bert Johnson:

Rob, they cannot hold the EM accountable. Those decisions are final and if there is significant damage to the city or school district, nothing can be done.

Friday September 28, 2012 11:12 Bert Johnson

11:12

[Comment From JoshJosh: ]

Rep. Pscholka - You just claimed federal judges have the capability to sell off public assets, and according to Kris H's link that is untrue. Are you going to respond to that point?

Friday September 28, 2012 11:12 Josh

11:13

State Rep Al Pscholka:

We had lots of discussion and opportunities for this bill, including hours of hearings and heard from lots of voices as this was being crafted.

Friday September 28, 2012 11:13 State Rep Al Pscholka

11:13

[Comment From B.H. TurnaroundB.H. Turnaround: ]

Bankruptcy also can force other surrounding communities to merge with the one going bankrupt. This area does not want that to happen and all want B.H. to prosper and turnaround.

Friday September 28, 2012 11:13 B.H. Turnaround

11:13

Jen Eyer | MLive.com:

Stephen, you're right about the meeting shutting down early: http://www.mlive.com/news/detroit/index.ssf/2012/09/detroit_meeting_cut_short_when.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+detroit-news+(Detroit+News+-+MLive.com)

Friday September 28, 2012 11:13 Jen Eyer | MLive.com

11:13

Bert Johnson:

Lucille, it does not shift to the taxpayers. Taxpayers are already on the hook for paying for their government. We are either talking about taxation without representation or taxation by a representative form of government. In the instance of bankruptcy, that taxation is overseen by a neutral arbiter aimed a being apolitical and financially astute.

Friday September 28, 2012 11:13 Bert Johnson

11:14

State Rep Al Pscholka:

You have seen judges sell water plants and other assest as part of the restructurings. The idea is to avoid bankruptcy.

Friday September 28, 2012 11:14 State Rep Al Pscholka

11:14

[Comment From James Hohman, MCPPJames Hohman, MCPP: ]

You guys are talking about bankruptcy as if it's an alternative to the EM. In Michigan right now the only way that a local government can enter bankruptcy is if an EM takes them there.

Friday September 28, 2012 11:14 James Hohman, MCPP

11:14

[Comment From James Hohman, MCPPJames Hohman, MCPP: ]

The state is already begging local governments not to approach insolvency by requiring balanced budgets, plans to resolve deficits, and emergency cash when it is necessary. Only elected officials that refuse appropriate management of these rules are in danger of a state-appointed receiver.

Friday September 28, 2012 11:14 James Hohman, MCPP

11:14

[Comment From Lucille B.Lucille B.: ]

Also, how would bankruptcy affect the State's credit rating, and ability to bond?

Friday September 28, 2012 11:14 Lucille B.

11:15

[Comment From Stephen BoyleStephen Boyle: ]

What I've not seen is accountability from Mayor Bing's administration in offering a organization chart or addressing redundant processes or staff - those are things an industrial engineer would know are required and a bankruptcy court would suggest. PA4 is sacrificing constitutional rights through TAXATION WITHOUT REPRESENTATION.

Friday September 28, 2012 11:15 Stephen Boyle

11:15

Bert Johnson:

You can have as many hearings as you'd like, but when a politically driven bill is forced down the throats of lawmakers in the Legislature, what you get is a politically slanted bill like Public Act 4. On the Senate floor alone, there were 18 Democratic amendments offered on items such as limiting conflicts of interest, limiting EM pay, and more. None were adopted.

Friday September 28, 2012 11:15 Bert Johnson

11:15

State Rep Al Pscholka:

It would impact our credit rating negatively which we have worked hard to improve, making it difficult for all units, and for economic development.

Friday September 28, 2012 11:15 State Rep Al Pscholka

11:15

[Comment From Stephen BoyleStephen Boyle: ]

The only reason bankruptcy isn't allowed is the law which is a referendum for removal - it is suspended and PA72 is NOT ACTIVE LAW. Look up MCL 8.4 to know what a repeal does.

Friday September 28, 2012 11:15 Stephen Boyle

11:16

[Comment From John BarnesJohn Barnes: ]

For both representatives: What is your reaction to a column today by Tim Skubick,in which Senate Majority Leader Randy Richardville says that even if voters strike the law down, a new version will be crafted?

Friday September 28, 2012 11:16 John Barnes

11:16

[Comment From Stephen BoyleStephen Boyle: ]

The governor, AG, and treasurer don't want the banks to have to negotiate debt. The banks are why we have gone into the problems we have through predatory lending.

Friday September 28, 2012 11:16 Stephen Boyle

11:17

Bert Johnson:

Lucille, neither of us are sophisticated enough to talk about that. It is a hypothetical and it has not been proven that bankruptcy automatically kills your credit rating and affects every unit of government. Bankruptcy is not meant to drive you further into debt and to estrange you from good credit ratings, but it is meant to provide a blueprint for how to move forward through debt payment and relief.

Friday September 28, 2012 11:17 Bert Johnson

11:17

State Rep Al Pscholka:

I have not had that discussion with Senator Richardville.

Friday September 28, 2012 11:17 State Rep Al Pscholka

11:17

[Comment From James Hohman, MCPPJames Hohman, MCPP: ]

The emergency financial manager bill, which maintains the same power of state-appointed receivership at the EM bill, was passed unanimously and signed by a democratic government and endorsed by a teachers union.

Friday September 28, 2012 11:17 James Hohman, MCPP

11:17

[Comment From Kris HKris H: ]

Wow!! @ John Barnes, I didn't see that! But I think the State Constitution forbids that...not that its been followed lately...

Friday September 28, 2012 11:17 Kris H

11:17

Jonathan Oosting:

Let's talk about some specifics in PA 4. First up, the ability to dissolve local units of government. Is that a necessary tool? Why or why not?

Friday September 28, 2012 11:17 Jonathan Oosting

11:18

Bert Johnson:

John Barnes, if that is what Sen. Richardville is proposing, that would be most disingenuous, given the fact that the voters have yet to even comment on a public ballot proposal. The people are well within their right to vote yes or no on this issue. The possibility of a replacement bill is exactly what is wrong with this Legislature.

Friday September 28, 2012 11:18 Bert Johnson

11:18

[Comment From Stephen BoyleStephen Boyle: ]

That democratic congress pushed it through with immediacy as well

Friday September 28, 2012 11:18 Stephen Boyle

11:18

State Rep Al Pscholka:

The EM cannot just dissolve a local unit of government. It is a very lenghty process.

Friday September 28, 2012 11:18 State Rep Al Pscholka

11:19

Jen Eyer | MLive.com:

Kris H., Skubick quotes Senate Majority Leader Randy Richardville as saying they'll write a new law that addresses people's concerns. You can find Tim Skubick's column here: http://www.mlive.com/politics/index.ssf/2012/09/tim_skubick_you_can_repeal_eme.html

Friday September 28, 2012 11:19 Jen Eyer | MLive.com

11:19

[Comment From B.H. TurnaroundB.H. Turnaround: ]

let's not forget some form of emergency managers has been in this state for many years going back at least 4 governors

Friday September 28, 2012 11:19 B.H. Turnaround

11:20

[Comment From Lucille B.Lucille B.: ]

Isn't the point of the law to prevent dissolution by offering options to turn municipalities around, that were not previously available under PA 72?

Friday September 28, 2012 11:20 Lucille B.

11:20

State Rep Al Pscholka:

We continue to gloss over the primary effect of the act - the vital addition of proactive, preventative steps designed to save municipalities and scool districts from plummeting toward financial insolvency. Following a set of specifically definted triggers, the state can now start the dialouge earlier.

Friday September 28, 2012 11:20 State Rep Al Pscholka

11:21

Bert Johnson:

No Jonathan. And yes, Rep. Pscholka, they can. It's been done and we've seen it happen. Jon, the EM is meant to get in, clean it up, and get out - returning the government to local control. That is not what is happening when you are renegotiating contracts, eliminating workers, selling assets and refusing to relinquish control. We have seen a conservative mantra of privatization and outsourcing invading local units of government.

Friday September 28, 2012 11:21 Bert Johnson

11:21

[Comment From Tom IvackoTom Ivacko: ]

Our recent Michigan Public Policy Survey asked local leaders all over the state whether they support or oppose PA 4 and it's various aspects. On the question of allowing an EM to recommend disincorporation of a jurisdiction, local leaders are evenly split. 39% support this part of the law, while 38% oppose it.

Friday September 28, 2012 11:21 Tom Ivacko

11:21

Meegan Holland|MLive.com:

Sorry everyone, that was me giving out the Skubick info, not Jen!

Friday September 28, 2012 11:21 Meegan Holland|MLive.com

11:21

[Comment From NDFan10NDFan10: ]

I am very confused about Senator Johnson's comments. He is claiming that bankruptcy is the answer to our financial troubles, but has stated that he's not sophisticated enough to understand the impact it could have on the state. Is there any way he could clarify those remarks?

Friday September 28, 2012 11:21 NDFan10

11:22

State Rep Al Pscholka:

It can happen that way, Senator. The village of Three Oaks, with a new council, worked with the EM and solved the issue. The new law doesn't prevent the council and EM from working together.

Friday September 28, 2012 11:22 State Rep Al Pscholka

11:22

[Comment From JakeJake: ]

Rep. Pscholka, can you explain how the new law improves upon the old one? I understand there's been a lot of sensationalism about what the law actually does, but everything I've read about it factually seems pretty common sense.

Friday September 28, 2012 11:22 Jake

11:22

[Comment From Stephen BoyleStephen Boyle: ]

We have rogue departments being created - look into the mess around the Institute of Population Health in Detroit. The State is seeding its position into local government.

Friday September 28, 2012 11:22 Stephen Boyle

11:22

Bert Johnson:

NDFan10: What I am saying is that Rep. Pscholka and I cannot say, based on a hypothetical, that the state's credit rating will plummet. To offer that as evidence is an opinion.

Friday September 28, 2012 11:22 Bert Johnson

11:23

State Rep Al Pscholka:

It adds some proactive steps so we don't get to the EM point. The old law waited until we had no good options to fix these issues. And it does add some tools so the EM isn't simply managing decay, so they can leave sooner.

Friday September 28, 2012 11:23 State Rep Al Pscholka

11:23

[Comment From Chris. SChris. S: ]

To Senator Johnson the Village of Three Oaks was taken over under the old PA 72 and succeeded in coming out of that oversight quite quickly and successfully so I take offense to your implying that no one has ever succeeded under state oversight and control. I also feel that the triggers in PA 4 for state help to occur long before an EM is appointed are not being considered or discussed.

Friday September 28, 2012 11:23 Chris. S

11:24

[Comment From NDFan10NDFan10: ]

So is Senator Johnson saying we should trudge into the supposedly unknown arena of municipal bankruptcy without having any idea what the impact could be on the state? I don't think I like that "solution."

Friday September 28, 2012 11:24 NDFan10

11:25

[Comment From Marco EsquandolasMarco Esquandolas: ]

If a city goes through bankruptcy, does that hurt the state’s credit rating?

Friday September 28, 2012 11:25 Marco Esquandolas

11:25

Meegan Holland|MLive.com:

Marco, Sen. Bert Johnson answered that earlier: Neither of us are sophisticated enough to talk about that. It is a hypothetical and it has not been proven that bankruptcy automatically kills your credit rating and affects every unit of government. Bankruptcy is not meant to drive you further into debt and to estrange you from good credit ratings, but it is meant to provide a blueprint for how to move forward through debt payment and relief.

Friday September 28, 2012 11:25 Meegan Holland|MLive.com

11:26

[Comment From GuestGuest: ]

Why should voters in Kent County, for example, care one way or the other on this law? How does an EM in Benton Harbor or Highland Park help/hurt taxpayers in Grand Rapids?

Friday September 28, 2012 11:26 Guest

11:26

Bert Johnson:

I'm not saying PA72 never worked. I'm saying PA4 is highly flawed. The City of Highland Park was taken over under PA72 and later regained control. PA4 is a wholesale takeover of government that, in its execution, has failed in Highland Park, Detroit, Pontiac, Benton Harbor and other local units of government. It gives too much authority to one appointed person who is not at all accountable to the government that they've taken over.

Friday September 28, 2012 11:26 Bert Johnson

11:26

State Rep Al Pscholka:

I still submit that a municipal bankruptcy in Michigan will hurt the state's credit rating, and could impact bonds in Grand Rapids, Traverse, etc.

Friday September 28, 2012 11:26 State Rep Al Pscholka

11:27

[Comment From RickRick: ]

How can the State justify paying these EMs such weighty salaries(much higher than the actual mayor), along with allowing them to bring numerous appointees on board who are also being paid huge Salaries, and keeping the current administrators as well? Flint is a perfect example of all of that.

Friday September 28, 2012 11:27 Rick

11:27

State Rep Al Pscholka:

In Benton Harbor, the EM is actually doing the job of the old city manager and finance director with a salary savings of 50k a year.

Friday September 28, 2012 11:27 State Rep Al Pscholka

11:27

Bert Johnson:

Rick, good question. It can't be justified. Democrats offered an amendment capping the salary at that of the Governor, and Republicans rejected that as well.

Friday September 28, 2012 11:27 Bert Johnson

11:27

[Comment From KimKim: ]

Is municipal bankruptcy or any other for that matter less known than the brand new PA 4 and the even newer law being crafted to circumvent the November vote. And the reason folks in cities not taken over by EMs should worry is obviously b/c you're turn could be next. Ask Allen Park.

Friday September 28, 2012 11:27 Kim

11:28

[Comment From AdamJAdamJ: ]

Sen. Johnson, it's not as if the state can randomly start appointing EMs to cities right? I mean, they have to demonstrate a whole lot misfeasance over an extended period of time in order to get a manager. It's not like these cities were humming along and then out of nowhere they started flailing suddenly, right?

Friday September 28, 2012 11:28 AdamJ

11:28

[Comment From Kris HKris H: ]

But bankruptcy generally is resolved comparatively quickly; not like the 11 years and counting for DPS with no end in sight. We could very possibly go through a managed-bankruptcy like we just witnessed with the autos and come out better. The problem is a lack of revenue, not incompetence on the part of elected officials.

Friday September 28, 2012 11:28 Kris H

11:28

Jonathan Oosting:

Back to the controversial specifics of PA 4, what do you think about the power to modify or terminate existing contracts and collective bargaining agreements?

Friday September 28, 2012 11:28 Jonathan Oosting

11:29

State Rep Al Pscholka:

That's right Adam, all the dire predictions of dozens of EM is simply not true and just politics.

Friday September 28, 2012 11:29 State Rep Al Pscholka

11:29

[Comment From Tom IvackoTom Ivacko: ]

Voters all over Michigan should care about PA 4 and fiscal health of local governments. There are numerous "spill over" effects from one jurisdiction to another, and fiscal emergencies in one community can impact other communites.

Friday September 28, 2012 11:29 Tom Ivacko

11:29

[Comment From RickRick: ]

In Flint the salaries for the "chiefs" is much larger than before, and the "indians" pay has been cut and their numbers reduced.

Friday September 28, 2012 11:29 Rick

11:29

[Comment From Stephen BoyleStephen Boyle: ]

If malfeasance is what triggers the EM brought in - then cleaning that up should happen first. Not wiping out services the public relies upon

Friday September 28, 2012 11:29 Stephen Boyle

11:29

[Comment From Chris. SChris. S: ]

Senator Johnson, had PA 4 been in place at the time of Three Oaks's decline, the triggers would have made the appointment of an EM much less likely and probably would have allowed the village to avoid the take over all together.

Friday September 28, 2012 11:29 Chris. S

11:30

[Comment From raptorroarraptorroar: ]

PA4 never worked in BH because they simply ignored whatever Joe Harris said. PA 72 took the obstinate attitude from the mayor and council, and then things began to happen. That happened last March.

Friday September 28, 2012 11:30 raptorroar

11:30

Bert Johnson:

AdamJ, the issue is that PA4 is predicated solely upon malfeasance, while ignoring the issues of state disinvestment in urban cores, the auto industry collapse, and the overall Recession as a result of the collapse of the financial industry.

Friday September 28, 2012 11:30 Bert Johnson

11:30

[Comment From Marco EsquandolasMarco Esquandolas: ]

Are there time limits on an EFM?

Friday September 28, 2012 11:30 Marco Esquandolas

11:30

Bert Johnson:

No Marco.

Friday September 28, 2012 11:30 Bert Johnson

11:30

[Comment From Marco EsquandolasMarco Esquandolas: ]

Can they stay "in Power" forever?

Friday September 28, 2012 11:30 Marco Esquandolas

11:30

[Comment From B.H. TurnaroundB.H. Turnaround: ]

Other than bankruptcy with no EM laws where does a troubled city or school seek help from financial disasters that must be corrected.

Friday September 28, 2012 11:30 B.H. Turnaround

11:30

Bert Johnson:

Yes, Marco.

Friday September 28, 2012 11:30 Bert Johnson

11:30

State Rep Al Pscholka:

Modifying contract is a tool, but built into the law is a period of time for collective bargaining. In BH, the EM negotiated two new collective bargaining agreements. About 80 percent of costs are personnel.

Friday September 28, 2012 11:30 State Rep Al Pscholka

11:30

[Comment From Frank JoyceFrank Joyce: ]

Bankruptcy is not as hypothetical as it's being made out to be. There was no discernible impact of the Vallejos CA bankruptcy elsewhere in CA. Likewise with the Orange County Bankruptcy many years ago. Using the private sector for comparison the bankruptcy of say, General Motors did not affect the credit rating of other auto companies. There are plenty of similar examples. What we do know is that em's have a proven record of failure in Flint, Highland Park and especially the Detroit Public Schools. There are many reasons for the failure. One of them is the inability to restructure debt which bankruptcy requires.

Friday September 28, 2012 11:30 Frank Joyce

11:31

Jonathan Oosting:

Marco, there is no set end date. Here's how the Citizens Research Council describes it: "A local government remains in receivership until the
emergency manager declares the financial emergency
to be rectified and the state treasurer (and
the superintendent of public instruction if the local
government is a school district) concurs. Before the
termination of receivership, the emergency manager
must adopt and implement a two-year budget, including
all contractual and employment agreements,
to start at the end of the receivership. The local
government is prohibited from amending that budget
without the approval of the state treasurer, and
from revising any order or ordinance implemented
by the emergency manager for a period of one year."

Friday September 28, 2012 11:31 Jonathan Oosting

11:31

[Comment From Kris HKris H: ]

@ Adam J, if we set this as a precedent, where local elected governments can be dissolved, then who's to say the standards can't be changed by a future legislature/governor? Slippery slope...

Friday September 28, 2012 11:31 Kris H

11:31

[Comment From Wendy Braun DalyWendy Braun Daly: ]

The question that nobody has asked, since the cities are a product of the legislature, does the State have any liability for repaying bonds that have been issued for the various municipalities who default on them?

Friday September 28, 2012 11:31 Wendy Braun Daly

11:31

Bert Johnson:

Jonathan, EMs removing collective bargaining and unilaterally renegotiating contracts begin to get dangerously close to violating the law, hence the large number of lawsuits thus far.

Friday September 28, 2012 11:31 Bert Johnson

11:31

Bert Johnson:

Wendy, yes, if the State Treasurer has cosigned those bonds.

Friday September 28, 2012 11:31 Bert Johnson

11:31

[Comment From Dave MurrayDave Murray: ]

Good morning! The Board of Education in Muskegon Heights requested the emergency manager, rather than having it imposed. Should the law have exceptions for districts requesting this intervention?

Friday September 28, 2012 11:31 Dave Murray

11:32

State Rep Al Pscholka:

Yes, and that is the problem - we can all be on the hook for those bonds.

Friday September 28, 2012 11:32 State Rep Al Pscholka

11:32

Bert Johnson:

Dave, there should always be a cooperative arrangement rather than having one person dictate to the locals what the solution should be.

Friday September 28, 2012 11:32 Bert Johnson

11:33

State Rep Al Pscholka:

Allen Park also asked for financial review. That is part of the process, which includes a local review team, a state review board, review from the Governor and Treasurer. EM's are just simply sent into places like critics claim.

Friday September 28, 2012 11:33 State Rep Al Pscholka

11:33

[Comment From Stephen BoyleStephen Boyle: ]

There has been a lot of issue with regards to collective bargaining even happening in Detroit. Union officials have given witness that there was no negotiating.

Friday September 28, 2012 11:33 Stephen Boyle

11:33

State Rep Al Pscholka:

EM"s are NOT sent in, I mistyped.

Friday September 28, 2012 11:33 State Rep Al Pscholka

11:34

[Comment From Tom IvackoTom Ivacko: ]

The MPPS survey of local leaders found that the aspect of PA 4 with the greatest support at the local level is the ability of an EM to reject, modify, or terminate collective bargaining agreements. Overall, 50% of local leaders support this power, while 30% oppose it. And local leaders from jurisdictions with public sector unions are even more strongly in support of this power: 68% support it.

Friday September 28, 2012 11:34 Tom Ivacko

11:34

[Comment From Stephen BoyleStephen Boyle: ]

I agree with Rep Johnson - there should always be a cooperative arrangement rather than having one person dictate to the locals what the solution should be.

Friday September 28, 2012 11:34 Stephen Boyle

11:34

[Comment From B.H. TurnaroundB.H. Turnaround: ]

How do you have cooperative arrangement when both sides refuse to work together to solve the problem.

Friday September 28, 2012 11:34 B.H. Turnaround

11:34

[Comment From NDFan10NDFan10: ]

Frank Joyce, saying the bankruptcy allows for the restructuring of debt can oftentimes include pensions whereas the EM does not have the ability to change pension payments to retirees under Public Act 4. How does the Senator and Representative feel about the fact that bankruptcy could result in the reduction of pension payments to retirees?

Friday September 28, 2012 11:34 NDFan10

11:34

State Rep Al Pscholka:

Deficit reduction plans and consent agreements are part of the process.

Friday September 28, 2012 11:34 State Rep Al Pscholka

11:35

State Rep Al Pscholka:

That's why we are trying to stay out of bankruptcy and it isn't the best option. Some of the California cases bear this out.

Friday September 28, 2012 11:35 State Rep Al Pscholka

11:36

[Comment From NDFan10NDFan10: ]

Has anyone brought up the millions of dollars in legal costs that must be borne by the municipality during a bankruptcy?

Friday September 28, 2012 11:36 NDFan10

11:36

Bert Johnson:

NDFan10, those are separate accounts under separate oversight. Those should be held harmless in any bankruptcy proceeding.

Friday September 28, 2012 11:36 Bert Johnson

11:36

Jonathan Oosting:

Sen. Johnson and Rep. Pscholka, you both represent areas where EMs are in place. Can you talk specifically about some of the successes or failures you've seen there?

Friday September 28, 2012 11:36 Jonathan Oosting

11:38

Bert Johnson:

Jonathan, I've seen overwhelming failure. In DPS, under two EMs, there was and is widespread use of no-bid contracts for services; the EM received outside private compensation in return for enacting a radical privatization and outsourcing agenda.

Friday September 28, 2012 11:38 Bert Johnson

11:38

[Comment From Stephen BoyleStephen Boyle: ]

NDfan10 the costs of the imposed EMs or Consent Agreement are going to outweigh those bankruptcy costs.

Friday September 28, 2012 11:38 Stephen Boyle

11:38

[Comment From Kristin Longley | MLiveKristin Longley | MLive: ]

The EFM and others in Flint have started a discussion about asking voters to approve an increase in the income tax, along the same lines as what Grand Rapids did in recent years. To both lawmakers: What are your thoughts on amending state law so Flint could put an income tax increase before voters?

Friday September 28, 2012 11:38 Kristin Longley | MLive

11:38

State Rep Al Pscholka:

We have seen some stability in finances, and several economic development projects. Yes, some tough choices had to be made, the elimination of a no bid garbage contract, a reduction of jobs in some areas. A public safety department was initiated that saves money and puts more force on the street. Benton Harbor is on the right track.

Friday September 28, 2012 11:38 State Rep Al Pscholka

11:38

Bert Johnson:

Today we see unfair and most likely illegal changes to Individual Education Plans for special needs students and busses that don't pick those children up.

Friday September 28, 2012 11:38 Bert Johnson

11:39

[Comment From JeffJeff: ]

There is nothing in these laws that prevent EMs from privatizing services with questionable providers. For example Pontiac's water and sewer system was outsourced to a company that has been kicked out of other cities around the country and charged with crimes by the EPA.

Friday September 28, 2012 11:39 Jeff

11:39

State Rep Al Pscholka:

Highland Park also received 14k per student, but spent 16k.

Friday September 28, 2012 11:39 State Rep Al Pscholka

11:39

[Comment From Dave MurrayDave Murray: ]

Sen. Johnson, I have heard some people say that one of the goals in cutting school funding was to force more and more districts into financial distress and prompt the establishment of more emergency managers around the state, and the creation of more charter districts. Do you agree?

Friday September 28, 2012 11:39 Dave Murray

11:39

Bert Johnson:

Jeff, that's exactly what happened in Detroit. Again, PA 4 in practice has increased corruption.

Friday September 28, 2012 11:39 Bert Johnson

11:39

[Comment From NDFan10NDFan10: ]

@Stephen Boyle, aren't the EM costs only the cost of the one EM's salary? How could that possibly be more than legal costs for a bankruptcy proceeding?

Friday September 28, 2012 11:39 NDFan10

11:40

Bert Johnson:

Rep. Pscholka, that is untrue. That's a mixture of TItle I money for before and after school care and extra curriculars. To include those figures in the per pupil allotment is disingenous at best.

Friday September 28, 2012 11:40 Bert Johnson

11:40

[Comment From Stephen BoyleStephen Boyle: ]

EMs have office staff, travel accounts, security.... those are all redundant costs

Friday September 28, 2012 11:40 Stephen Boyle

11:41

State Rep Al Pscholka:

Over two years state support of schools has actually increased, but we have lost 730 million in federal stimulus monies for schools that ended in 2011.

Friday September 28, 2012 11:41 State Rep Al Pscholka

11:41

Bert Johnson:

Dave Murray, I agree. Given the Republican Legislature's insistence on completely shutting down Highland Park's public system and outsourcing its entire operation to a private charter school operator, it is pretty clear.

Friday September 28, 2012 11:41 Bert Johnson

11:42

[Comment From Tom IvackoTom Ivacko: ]

On the question of allowing Flint to put an income tax increase before the voters, we are also analyzing MPPS data right now that asked local leaders about the current system of funding local government in Michigan. We will have a U-M report on this later in the fall. At the moment I can say there is a great deal of concern among local leaders across the state that the current system of funding local government is broken. This is especially true among leaders from the state's larger communities, which have tended to suffer greater fiscal distress over the last few years.

Friday September 28, 2012 11:42 Tom Ivacko

11:42

State Rep Al Pscholka:

Raising income taxes and other taxes doesn't attract residents, investment, or jobs. It leads to more loss of tax base, population, and jobs.

Friday September 28, 2012 11:42 State Rep Al Pscholka

11:43

Bert Johnson:

The U.S. House Judiciary Committee prepared a report that outlines, among other things we are discussing, several striking instances from Detroit, Highland Park, Pontiac, Benton Harbor, Hamtramck, Inkster and Ecorse of malfeasance on the part of EMs in those jurisdiction.

Friday September 28, 2012 11:43 Bert Johnson

11:43

Meegan Holland|MLive.com:

Dave Murray, by the way, is the statewide education reporter for MLive. Thanks Dave for the question on whether EFM law could increase charter school districts.

Friday September 28, 2012 11:43 Meegan Holland|MLive.com

11:43

[Comment From B.H. TurnaroundB.H. Turnaround: ]

Tens of thousands of dollars are being spent with accountants and lawyers that an EM feels must be spent to get the proper systems in place. But, wow it is a staggering amount to get B.H. on target for a turnaround. Not a part of EM salary but it still is enormous expense.

Friday September 28, 2012 11:43 B.H. Turnaround

11:43

Bert Johnson:

The link to that report is here: http://democrats.judiciary.house.gov/sites/democrats.judiciary.house.gov/files/documents/EM_Report120221F.pdf

Friday September 28, 2012 11:43 Bert Johnson

11:44

[Comment From Kris HKris H: ]

@ SR Pscholka: What do you say to the position of the former Pontiac EM, Michael Stampfler, who says the law is destined to fail due to it's inability to raise revenue and restructure debt?

Friday September 28, 2012 11:44 Kris H

11:44

State Rep Al Pscholka:

In many cases, the financial records of some communities were a mess - late audits, co mingled funds, missing pension funds.

Friday September 28, 2012 11:44 State Rep Al Pscholka

11:45

Bert Johnson:

The Emergency Manager law is part of an overall strategy to undercut unions, collective bargaining and local (particularly Democratic) control. The strategy is to "starve the beast" - in other words: cut, cut, cut. Until a "fiscal emergency" exists, that allows them to take over. We've seen it in Michigan and across the country. Michigan's Republicans have been a bit more savvy at remaining under the radar. That, however, does not change the end result of their policies.

Friday September 28, 2012 11:45 Bert Johnson

11:45

State Rep Al Pscholka:

I disagree with Mr. Stampfler and the Legislature just put into place some emergency financing to assist some communities.

Friday September 28, 2012 11:45 State Rep Al Pscholka

11:46

Jonathan Oosting:

Rep. Pscholka, going back to Benton Harbor, I understand Joe Harris and some city leaders are working on a recovery plan that includes a $7 million state loan. Do you support that approach?

Friday September 28, 2012 11:46 Jonathan Oosting

11:47

State Rep Al Pscholka:

Our urban policy has to be more sophisticated than "send more money from Lansing.' It will take a partnership of government, non profits, business, and some real collaboration, not donut and coffee meetings where we all nod our heads about working together.

Friday September 28, 2012 11:47 State Rep Al Pscholka

11:48

[Comment From Dave MurrayDave Murray: ]

Rep. Pscholka, you are on the Appropriations Committee. Is there a GOP plan to push more districts into financial distress distress and create more charter districts?

Friday September 28, 2012 11:48 Dave Murray

11:48

State Rep Al Pscholka:

That could be an option for Benton Harbor, but if they can't pay it back, it doesn't solve the issue. Treasury makes that call.

Friday September 28, 2012 11:48 State Rep Al Pscholka

11:49

[Comment From NDFan10NDFan10: ]

To Senator Johnson's earlier comments, ": NDFan10, those are separate accounts under separate oversight. Those should be held harmless in any bankruptcy proceeding." Here is a link to an article that details the predicament of retirees in Stockton, CA suffering through bankruptcy because the city has made massive reductions to their retiree health care accounts. Here is a quote from a retiree in the article "“For me, bankruptcy might as well be a life sentence,” said retired police officer Gary Jones, who has lived with a brain tumor for more than a decade. Jones said he would no longer be able to afford chemotherapy and other treatments. http://www.wsws.org/articles/2012/jul2012/pens-j12.shtml

Friday September 28, 2012 11:49 NDFan10

11:49

Bert Johnson:

That's an interesting response, considering Republicans left no provisions in PA4 for a cooperative arrangement. In fact, it is surprising that the so-called "small government conservatives" in Michigan's Republican Party support such a plan predicated so much upon state central planning.

Friday September 28, 2012 11:49 Bert Johnson

11:49

State Rep Al Pscholka:

Mr. Murray - that is ridiculous.

Friday September 28, 2012 11:49 State Rep Al Pscholka

11:50

Bert Johnson:

Robert Bobb, EM of DPS, was paid tens of thousands of dollars in addition to his state Emergency Manager salary to push an agenda of privatization and charter schools. I think Dave Murray is on point.

Friday September 28, 2012 11:50 Bert Johnson

11:50

Bert Johnson:

(Bobb was paid that money by private, pro-charter school organizations)

Friday September 28, 2012 11:50 Bert Johnson

11:51

[Comment From Kris HKris H: ]

SR Pscholka: What role do you believe the economic collapse had on the condition of Michigan communities? And, do you believe it is fair to dissolve local governments do to financial emergencies when a significant part of the money lost by those governments was due to the state's inability to pay them through revenue sharing?

Friday September 28, 2012 11:51 Kris H

11:53

[Comment From B.H. TurnaroundB.H. Turnaround: ]

I ask once again, where does a troubled municipality or school go for help other than bankruptcy if there is no type of EM help out there?

Friday September 28, 2012 11:53 B.H. Turnaround

11:53

State Rep Al Pscholka:

Yes, Michigan faced tough times and most units of governments made tough decisions to balance budgets, and start to look at liabilities. I have not advocated for dissolving local governments, that's a Rachel Maddow claim, sorry, that doesn't make it true. Declining property values also played a role along with revenue sharing. I served on a township board that planned for the elimination of statutory revenue sharing, others did as well

Friday September 28, 2012 11:53 State Rep Al Pscholka

11:53

[Comment From Tom IvackoTom Ivacko: ]

Kris H: as a bit of background information, our last three MPPS annual fiscal health surveys at U-M have shown that fiscal stress at the local level has resulted from a combination of (1) decreased revenues, including state revenue sharing and decreased property taxes; (2) increased costs to provide services; and (3) increased demand for services.

Friday September 28, 2012 11:53 Tom Ivacko

11:54

State Rep Al Pscholka:

And local units Tom, are now starting to look at unfunded liabilities and other costs, including defined contribution pensions and other costs.

Friday September 28, 2012 11:54 State Rep Al Pscholka

11:55

Bert Johnson:

I don't have enough information to comment on the case in California, unfortunately.

Friday September 28, 2012 11:55 Bert Johnson

11:55

[Comment From Tom IvackoTom Ivacko: ]

Rep. Pscholka - yes, you are absolutely correct on that. The good news is that our MPPS surveys show many local jursidictions are taking action to address these liabilities too.

Friday September 28, 2012 11:55 Tom Ivacko

11:56

[Comment From B.H. TurnaroundB.H. Turnaround: ]

No surrounding municipalities want B.H. to fail nor do they want to see it dissolved and those problems passed to them. The want B.H. to succeed.

Friday September 28, 2012 11:56 B.H. Turnaround

11:56

Jonathan Oosting:

We're about to wrap things up, folks. Final question: In one graph, make your best pitch to voters on why they should support or repeal PA 4.

Friday September 28, 2012 11:56 Jonathan Oosting

11:56

State Rep Al Pscholka:

Our country faces 65 trillion in debt and unfunded liabilities, so it is time we start to focus on these issues. We can't just dump it on our kids and grandkids. Pretending someone else will pay for these liabilities and debt is like saying we can wave a magic wand and make it go away. It will take tough choices and political courage.

Friday September 28, 2012 11:56 State Rep Al Pscholka

11:57

Bert Johnson:

The beauty of this livechat is that if Rep. Pscholka and I (or any Democrat for that matter) could have had conversations like this on the front-end of the creation of this law, we might be in a better place all across the state. Unfortunately, that did not happen. No effort was made to do this in a bipartisan fashion and what we have, quite frankly, is gross government overreach into our local communities.

Friday September 28, 2012 11:57 Bert Johnson

11:57

Meegan Holland|MLive.com:

I love your point, Sen. Johnson. Communication!

Friday September 28, 2012 11:57 Meegan Holland|MLive.com

11:58

State Rep Al Pscholka:

My doors is always open Senator. We need this law to stay so we can help communities before they get to the point of no return financially. Consent agreements and deficit reduction plans are much better. We can get there with a Yes vote on Prop. 1.

Friday September 28, 2012 11:58 State Rep Al Pscholka

12:00

[Comment From Tom IvackoTom Ivacko: ]

One of the best academic studies I have found reported that most state governments do a poor job of monitoring and dealing with local government fiscal distress. Whether or not PA 4 is upheld, the current fiscal situation in many local jurisdictions shows the state needs to at least be monitoring these issues and be prepared to assist in some way.

Friday September 28, 2012 12:00 Tom Ivacko

12:00

Bert Johnson:

Voters should choose to repeal PA4. The reason is two-fold. On the surface, it goes against every Constitutional and democratic principle we claim as Americans. Local control, election of our representatives and no taxation without representation. In practice, it has been a failure. It has led to corruption on the part of Emergency Managers. It has allowed for massive privatization, outsourcing of jobs and has in fact put children at risk. Additionally, the results are all we need to prove this point. Cities and school districts under an Emergency Manager have not improved. A No vote on Proposal 1 will return some semblance of our democratic rights and will allow us to, hopefully, return to the drawing board to create a better law - one which does not infringe on our Constitutional rights.

Friday September 28, 2012 12:00 Bert Johnson

12:00

Meegan Holland|MLive.com:

We're wrapping up folks. Thanks for your questions and a BIG thanks to Sen. Bert Johnson, Rep. Al Pscholka and Tom Ivacko for joining us! Come back next Friday for a live chat about the two thirds tax vote ballot proposal, and keep reading MLive's Michigan Decides 2012 series.

You can replay this live chat. Goodbye everyone!

Friday September 28, 2012 12:00 Meegan Holland|MLive.com

12:01