When I was a kid, I loved Star Trek. In one of the movies, the crew of the Starship Enterprise goes back in time to the 1980s and one of the crewmembers, Lt. Chekov, injures his head in a nasty fall. As the doctors of the 1980s prepare to drill a hole into the unconscious Chekov’s skull in order to relieve pressure building on his brain, the Enterprise’s Dr. McCoy busts into the operating room and accuses the doctor holding the drill of being barbaric, shouting, “Drilling holes in his head is not the answer!”
In the movie, Dr. McCoy has some futuristic device to save Chekov. But what if McCoy had no such device and still shouted that what the doctor was doing was, “not the answer?” Certainly drilling into somebody’s head is never a great solution, but should the doctor have put down his drill and let Chekov die instead?
Monday’s protests reminded me of this scene, as about 1,000 protesters who oppose Public Act 4 marched to Governor Snyder’s home and claimed P.A. 4 was not the answer. Rather than focusing on a law’s imperfections, society should form opinions about a law based on competing alternatives.
Newspaper reports, including one from The Michigan Daily, state that P.A. 4 allows an emergency financial manager to “temporarily replace elected city officials.” This isn’t quite true. Michigan’s emergency financial manager law, Public Act 72, was adopted in 1990 — more than 20 years before P.A. 4 became law. Under P.A. 72, Michigan’s governor may appoint an EFM to fix the finances of severely indebted units of local government, such as cities or public schools. The appointed EFM had sole power over the unit’s finances. The goal was to prevent these units from having to declare bankruptcy.
Since units of local government’s outlays are often dominated by union contracts — which an EFM could not touch under P.A. 72 — the original law’s effectiveness was often limited and was thus amended by P.A. 4. The amendments grant EFMs additional powers to dissolve union contracts and amend pensions within certain restrictions.
Detroit Public Schools are an example of the success achieved under P.A. 4 that was not possible under P.A. 72. Years of mismanagement and declining enrollment had left DPS’ finances in a mess, and balancing its budget required cuts to unionized employees’ pay and benefits. Under the old law, DPS’ former EFM could not force these cuts, and unions had no reason to accept lower wages. But almost immediately after P.A. 4 was passed, a new union contract was signed. Unions specifically cited P.A. 4 as the reason they agreed to necessary concessions, and the system’s new EFM, Roy Roberts, announced in November that DPS finally have a budget surplus.
Detroit appears poised to next receive an EFM, and Snyder has asked for a financial review of the city, which is the first step in the appointment process. Similar to its school system, years of fiscal mismanagement and a declining population have driven Detroit to financial distress. The situation is so dire that it now issues bonds to service its debt. Were a private company in this situation, bankruptcy would be near.
Wages and pensions already account for more than half of city outlays, and these expanding legacy costs are expected to increase this number to over 70 percent. Balancing Detroit’s budget without cutting union wages and benefits isn’t possible.
Should Detroit’s elected and union leaders fail to balance the city’s budget, and were P.A. 4 repealed, any future Detroit EFM could not implement these necessary cuts. In this situation, the only alternative is bankruptcy.
No city of Detroit’s size has ever declared bankruptcy, and it would almost certainly be a messy process, lasting months if not years. In bankruptcy court, an appointed judge would replace Detroit’s elected leaders and force necessary union concessions.
These are the necessary alternatives society should debate: the competing imperfect solutions of emergency financial management versus bankruptcy. Both solutions remove elected leaders from their positions, both solutions are messy and neither solution is fair.
Unfortunately, no such discussion is taking place. Instead we are bombarded with the problems of P.A. 4 with a complete disregard for what would happen if no such law existed.
Rarely are solutions in public policy perfect, and it is easy to say an imperfect solution is wrong if one does not consider the alternatives. Should Detroit’s elected leaders fail in their responsibility to balance the budget, Detroit will be like Chekov on that operating table and P.A. 4 like the doctor with the drill. Protesters shouting that emergency fiscal management is wrong without offering an alternative solution are asking the doctor to put down his drill and let Detroit die.