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Voters will decide whether to approve Public Act 4, the state's emergency manager law. The law allows the state to assess the financial condition of cities and school districts, and to appoint an emergency manager should a financial emergency be found.The emergency manager takes the place of local government officials and can modify and terminate contracts as needed.Here's how the referendum will appear on your ballotYou can find more information about the referendum below.

Threat to democracy, or safeguard against bankruptcy? Voters decide Proposal 1

Next week, voters will decide whether Michigan’s controversial emergency manager law is the right way for the state to make sure local governments avoid financial collapse.

Public Act 4 gave state appointees unprecedented control over distressed school districts and cities, like Pontiac.

Contractors replace employees

There was a time, not that long ago, when the city of Pontiac employed about 800 workers.

Today there are 86 – and more than half of them are court employees.

It's a staggering difference, and you can blame or thank Lou Schimmel for it.

Schimmel was born and raised in this city. Now he's its emergency financial manager.

He walks through Pontiac City Hall – for sale, if you’re interested – past offices where contractors have taken over whole city departments.

Wade Trim is now the building department. The income tax division: privatized. Police and fire: outsourced. Same with trash pick-up. Same with lighting.

To some, Schimmel is Pontiac's financial savior. But Schimmel is well aware that others see him as a dictator installed by the state through an undemocratic process.

“That’s just flat-out wrong,” Schimmel says of that characterization.  “I am appointed under an act that was passed by an elected Legislature. So it is a democratic process in my book.”

The extraordinary powers granted to emergency managers under PA 4 include the ability to nullify labor contracts, ignore city charter provisions, and pass ordinances. Schimmel helped draft those changes after working under an earlier version of the law. He's actually been working under that older law since August. That's when a state elections board placed Proposal One on the ballot and Public Act Four was suspended.

Schimmel says without the powers granted under Public Act Four, appointees like him cannot effectively bail cities out of their financial messes.

Democracy denied to poor cities?

Critics say cities' financial health is not the main goal of the law.

“The focus is to pillage the infrastructure from these cities, and to get it into private hands,” says Pontiac City Councilman Kermit Williams.

“[The law] says if you’re poor enough, we can strip you of your democracy. If your city falls below a certain tax base, then you’re gone. “

Williams doesn't have a whole lot to do at city hall these days, since he's basically a bench warmer until the state declares Pontiac's financial emergency over. So in the run-up to the November election he's been going door-to-door, asking people to vote no on Proposal 1.

While he's canvassing, Williams points out streets in need of repair, and a utility line that snakes across a sidewalk near where some children are playing. On one block, Williams stands in front of a house gutted by fire, where people have been dumping trash.

Williams says his complaints about the problems have fallen on deaf ears with the people now running Pontiac. Under elected leaders, Williams says, the response would be different.

“I’m responsible for this area,” he says.” If these things weren’t dealt with the people would be trying to get rid of me. And I’m up for election next year. An emergency manager can stay forever.“

A temporary fix

State Rep. Al Pscholka (R-Stevensville) says the idea is for emergency managers to get the books balanced, then hand control back to local governments. Pscholka sponsored the emergency manager law, which he says made him the subject of 17 death threats, and two recall attempts.

“It’s not anti-democratic,” Pscholka says. “I’ll tell you, the most anti-democratic is federal bankruptcy court. That is probably the most undemocratic process you can go through.”

And Pscholka and others say that's the specter that looms if Public Act Four is wiped off the books. Pscholka says bankruptcy would be unpredictable, and its effects could cascade across the state.

Supporters of the law's repeal say lawmakers need to go back to the drawing board, and come up with an alternative that doesn’t trample voting rights, and that will help those cities and schools stay viable once an emergency manager packs up and leaves.

Sarah Hulett is Michigan Public's Director of Amplify & Longform, helping reporters to do their best work.
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