When cities approach financial distress, creditors take notice. Looking for someone to right the city’s financial course, creditors largely expect that the state will intervene to bring the city back to good financial standing. Often, the state will appoint an emergency manager––a person designated by the state’s governor to return the city to balance.
Emergency managers have a great deal of power. Michigan’s emergency takeover law, for example, allows a state-appointed emergency manager to subject the city’s elected officials to “any condition” the manager wishes. To date, legal scholars have largely failed to realize just how damaging these measures are. Emergency managers are problematic for a number of reasons. As appointed officials charged with the narrow task of balancing the city’s revenues and expenditures, emergency managers take a myopic view of systemic financial problems, prioritizing short-term financial solutions over the long-term interests of local residents. Further, emergency managers may not perform as well as expected, in part because resources are limited and in part because their decisions do not account for the city’s long-term financial interests. In the worst cases, emergency managers and the governors that appoint them are driven by political gamesmanship or impermissible racial bias, further undermining public confidence in government officials.
Flint’s poisoned water and Detroit’s abandoned buildings are all-too-visible examples of emergency manager systems gone awry.
Given the failures of emergency managers, states should consider alternatives. Though judicial supervision may provide a remedy, other more permanent structures—like notice-and-comment periods, citizen commissions, and legislative reviews—could enable local residents to retain a voice in their community, even through financial crises.