Thursday, June 10, 2010

No where to go but Up

I sat here at my computer yesterday to write a piece about Emergency Financial Managers (EFM).  I got distracted with something else and decided to wait for another day.  Well, that day is here.

Some background.  I chair the Legislative Committee for the Michigan Government Officers Association (MGFOA).  In 2004, after two years of study, we recommended changes to the Department of Treasury for a new Fiscal Responsibility Act (PA 72).  It got drafted and introduced and went - nowhere.  Treasury would not support the changes.

Mind you, while things were difficult in 2002 following 9-11, they seem rosy compared to where we are today.  And seems like a day does not go by without a story about Pontiac and their EFM.

Our Legislative Committee, IMHO, is like a brain trust of local government.  When the Pontiac EFM got appointed, we were like, WHO?  Where did he come from and what municipal experience did he have?

Granted, every year some community elects a bunch of people with no experience and no clue about how government is supposed to run.  Reading the state laws and local ordinances would help, but, hey, that takes precious time out of campaigning.  The electorate doesn't want to spend a lot of time making a decision as to who is more qualified as long as the right party designation is behind the name.  And I guess that is why so many communities end up in the mess they are in. 

So now we have three new bills introduced in the House to amend the current Public Act 72.  The first of these, HB 6253, would require the EFM to have the approval of the Chief Administrative Officer (CAO) of the community to create a new position or fill existing vacancies and remove department heads or the clerk.  The CAO would retain the authority to hire and fire department heads and the EFM would have limited abiltiy to sell assests or enter into contracts exceeding one year.

Well, it seems obvious where this is coming from and seems like a solution to one issue in one municipality.  But I can think of another where the former finance director of a community in receivership was hired by the Mayor in a community that eventually went into receivership, thanks in part to the finance director.  If the CAO is part of the problem, how does this change help?

HB 6254 would require that an EFM 'shall have knowledge, skill, and experience in managing a local government and shall be chosen based solely on competence'.  WOW.  Maybe we should make that a qualification for getting elected.  Government positions that are administrative in nature should not be like kids at a playground where everyone has a turn on the swing set.

HB 6255 would require a written financial plan within 180 days.  Well, gee, if communities passed realistic budgets, stuck to them by making hard choices, and had qualified people in positions of authority to begin with, they may not be in receivership.  The knowledge base might just be there to deal with the issues that arise.

How about everyone have a financial plan?  How about changes to existing laws regarding Urban Cooperation?  And consolidation of schools, communities, and services.

I guess the answers are because we are an imperfect world.  And we resist change.

The Legislative Committee of MGFOA submitted a list of potential EFMs to the Department of Treasury last year.  Some of our suggested people are on the Department's list of Local Unit Financial Advisors.  Some others, like myself, have yet to send in an application.  (who needs the aggravation?)

I, along with my committee members, will be following these bills.  While not perfect, they do point out that we have lots of problems in managing local government finances.

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