Detroit’s version of fiscal cliff lost in right-to-work row

12/14/2012

DETROIT — If you want a measure of how crazy things are in Michigan these days, consider: On Monday, the state signaled its intention to take control of Detroit, probably next month.

Yet thanks to the right-to-work wars, that dramatic development involving Michigan’s largest city barely received any attention.

That is, except from state officials. “We are coming to the end of the road,” state Treasurer Andy Dillon said, as he announced the required review of Detroit finances that seems almost certain to lead to naming an emergency financial manager.

Protesting feebly, trying to insist he might be able to balance the budget once he lays off another 500 city workers, Mayor Dave Bing seemed to acknowledge the inevitable, saying: “The state‘s got to do what they’ve got to do.”

Nothing like this has ever happened before. No city Detroit’s size has had an emergency manager or gone through bankruptcy.

Yet thanks to the battle over right to work, the story barely snuck onto the bottom of the front page of Detroit’s newspapers.

True, nobody would deny the right-to-work coup Republicans pulled off in the lame-duck session of the Legislature on Dec. 5 was stunning. Michigan woke up that day unsure whether Gov. Rick Snyder would sign a right-to-work bill. Since he took office last year, he repeatedly has said that outlawing the union shop “isn’t on my agenda.”

The self-styled “tough nerd” said he wanted to avoid creating the bitter atmosphere that developed in Ohio and Wisconsin after governors in those states took on organized labor.

But then he did an about-face. Not only was Mr. Snyder suddenly in favor of right to work — last week, he said the time to do it is now.

The governor announced his reversal shortly before noon. By the time some people had finished eating dinner, right-to-work legislation had been rammed through the state House and Senate.

“As much as I detest the legislation,” Democratic state Sen. Steve Bieda said, “I detest more the way it was done. We’ve had more deliberate hearings on something like a commemorative license plate.”

Five days later, the House and Senate reconciled their versions, and Governor Snyder signed the legislation into law.

Right to work is bound to change Michigan, though perhaps more for government workers and teachers, most of whom are union members. But just one out of eight Michigan private-sector workers is represented by a union.

The law won’t take effect until late March. It will be much longer before its full effects become apparent.

Developments in Detroit are bound to happen much faster. Eight months ago, the mayor and the governor fashioned a consent agreement to keep the city from having an emergency manager.

However, that agreement seemed doomed from the start. Unions balked at making concessions. The mayor and City Council first fought, then tried to stare each other down in a cold war.

Led by Charles Pugh, a former local TV anchor with no prior government experience, council seemed automatically to oppose anything the mayor or the governor was for.

When council repeatedly refused to approve a contract with a law firm, something specifically required by the consent agreement, the state seemed to decide enough was enough.

On Monday, the Detroit Financial Advisory Board urged the state to begin a month-long review of the city’s books. In other cities, that has been the last step before an emergency manager.

When that was announced, council suddenly seemed to undergo an attitude adjustment. Members suddenly approved reform measures that had been stalled for weeks.

They approved, by a narrow 5-4 vote, the law firm contract, as well as other measures designed to root out fraud and corruption and allow the city to furlough and lay off employees.

Mayor Bing said he hoped this “will go a long way toward re-establishing the relationship between ourselves and Lansing.”

But there was no indication that anything fundamental had changed, that the state review of Detroit‘s finances would be halted, or that any of this solves the city’s inability to balance its budget.

The city’s accumulated budget deficit is projected soon to reach $440 million. That doesn’t include $12 billion in unfunded pension and other liabilities.

Some council members seem to understand the city’s situation. Council President Gary Brown sent a remarkable email to his constituents. He said he never liked the idea of an emergency manager and didn’t want one now — except he knows there may be no choice.

Mr. Brown said: “It is likely the only option to avoid bankruptcy, as the city‘s expenses continue to outpace revenue.”

Detroit seems likely to run out of money to meet its payroll within weeks.

Mr. Brown, a former police officer, told his constituents: “In my opinion, bankruptcy is not an option for Detroit. It would increase unemployment, and have widespread impact on public and private institutions in metro Detroit.”

That would include a near-certain downgrading of the bond ratings of surrounding counties and communities, and of the state.

A Detroit bankruptcy filing could be tied up in federal court for months, costing the city millions of dollars. Still, it isn’t clear whether any emergency manager could stop a municipal bankruptcy, or instead could be forced to lead the city into one.

The week ended with much of Michigan stunned at having suddenly been transformed into a right-to-work state.

But Detroit may yet top Lansing when it comes to drama — possibly within a few short weeks.

Jack Lessenberry, a member of the journalism faculty at Wayne State University in Detroit and The Blade’s ombudsman, writes on issues and people in Michigan.

Contact him at: omblade@aol.com