Though Wisconsin has received more media coverage for its new law banning collective bargaining for public unions, Michigan’s new Emergency Manager law is more insidious and potentially destructive of public goods like education and corrections, and public services such as road repair and snow plowing.
The rationale behind the law, which was passed by the Republican-dominated state legislature and signed by Republican Gov. Rick Snyder on March 16, is deficit reduction. It allows the governor to appoint an emergency manager for any municipality (city, township, county or school district) in a financial emergency as determined by the state treasurer. The emergency manager may dismiss elected boards. He may abrogate any contract that the municipality has negotiated. He may issue bonds to pay the municipality’s expenses for which the residents of the community are responsible – without a vote by the community or the community’s elected representatives.
As opposed to Wisconsin’s new law, which merely banned collective bargaining for future contracts, Michigan’s law threatens all existing public union contracts. This threat has already had a chilling effect on public-sector unions. For example, the city of Flint recently floated an $8 million bond to maintain city services. Under the threat of the Emergency Manager law, the firefighters union in Flint offered concessions that included an increase in the employee share of health insurance premiums and the elimination of holiday pay and night shift wage differentials. In the city of Pontiac, which is already under the control of an emergency manager, the police officers voted to dissolve their union.
The irony is that the state budget deficit in Michigan is a consequence, not the cause, of our ills. The state fiscal deficit ($1.8 billion) is the product of a jobs deficit. The jobless rate in Michigan stands at 10.7 percent.
When people lose their jobs, the state loses tax revenue (through reduced income and sales tax receipts). Furthermore, unemployed residents require more services from the state (e.g., Medicaid, which is partially funded by the state). The real solution to the state budget deficit is aggressive job creation. This must be tackled at the federal level through a stimulus bill such as Rep. John Conyers’ “Humphrey-Hawkins 21st Century Full Employment and Training Act.” This bill seeks to create millions of new jobs by offering federal grants to states and municipalities to fund investment in infrastructure (roads, bridges, schools, water and sewer pipelines, health facilities), social services (teachers, teachers’ aides, police, elder and child care workers) and green technologies (light rail, solar and wind energy production). The proposed act is financed through a modest tax on financial transactions (trading of stocks and bonds), and therefore revenue-neutral. A Conyers’ aide explained, “Wall Street wrecked the economy and they have a moral obligation to correct what they have done and help put people back to work.” The bill, introduced on March 2, currently has six sponsors in the House. Contact your representative and encourage them to come on board. It is time to put full employment on the national agenda.