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Michigan’s Municipal Takeover Law

Fiscal Stability vs. Local Democracy

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Ashley E. Nickels
February 5, 2016

Michigan has one of the most aggressive policies for responding to local fiscal crises. In 2011, Michigan passed what is commonly called “PA 4” into law, giving the state’s emergency financial manager law more teeth. While, the law was later repealed by popular vote, it was reinstated through the passage of “PA 436.”

Michigan’s emergency manager law draws our attention to the ongoing policy paradox of how we address urban crises, bringing to the forefront the issues of fiscal stability versus local democracy; budgets versus people. Michigan’s emergency manager law is a form of municipal takeover. It is the state-directed policy of declaring a municipality in a state of fiscal emergency and intervening by:

1. Placing the municipality under state receivership.

2. Handing over control of local government decisionmaking to a state-appointed manager, effectively relieving local elected officials of their governing authority.

3. Implementing a combination of tools to help stabilize the local government’s fiscal condition.

Municipal takeovers, in theory, are a policy of last resort, used when both local government and the local economy are unstable and crisis-prone. Under municipal takeover, the state-appointed emergency manager has broad authority to negotiate debt, supervise local finances, approve budgets and restructure government, including terminating employees. In effect, the policy suspends local representative democracy in an effort to avoid municipal bankruptcy or economic contagion by addressing the city’s fiscal crisis.

Flint, Mich., was the first city placed under a state-appointed emergency manager after the passage of PA 4. Like many other municipalities across the state of Michigan and beyond, Flint has faced ongoing fiscal challenges due, in part, to economic disinvestment and the issues of blight, poverty, unemployment and crime. In 2002, and then again in 2011, the state intervened in Flint governance by placing it under state receivership and appointing a series of emergency (financial) managers.

A state’s concern regarding credit downgrades, municipal bankruptcy and fiscal contagion are common motivations for strong intervention. In Michigan, the stated purpose of the emergency manager, under state law, is to “to safeguard and assure the financial accountability of local units of government.” In a 2011 press release drafted by the State Treasurer’s office, the state noted its intervention in Flint was necessary to address the city’s “probable financial stress,” which existed “as the result of several issues, including failure to follow deficit elimination plans, general fund operating losses for the last several years and recurring cash shortages.” More importantly, the underlying assumption of this type of strong state intervention is that local government is the problem and the region (or state) may suffer consequently.

In 2015, Flint’s fiscal emergency was lifted and the emergency manager left. But in its wake were an array of temporary and long-term structural changes that are sure to have a long-lasting impact on much more than the budget. Between 2011 and 2015, a series of four state-appointed managers drafted more than 90 executive orders, including selling off city assets, eliminating citizen advisory boards, establishing a receivership transition advisory board and appointing a city administrator who reports to not only the mayor and city council but also the receivership transition advisory board. The beneficiaries of these executive orders, in most instances, were not the residents, who, for example, saw their water bills rise, but rather a handful of prominent local elites.


The process of temporarily suspending the decisionmaking powers of local elected officials in the name of “getting things done,” also has a symbolic impact with even more long-term consequences. For many of the African-American residents in Flint, the suspension of the authority of their duly elected local officials is an affront to their hard-won civil and voting rights. The successful mayoral campaign by Karen Weaver is indicative of the deep distrust and frustration many residents had with emergency management and the perceived complicity of the incumbent.

While it is true Flint’s budget is stabilized, it comes at a cost. Understanding that cost is paramount if public administration practitioners and scholars are genuinely dedicated to “promoting democratic participation” and “strengthening social equity” as espoused in our code of ethics. Moreover, the appointment of a “manager” that supersedes the authority of the “mayor” signifies the shift from government through democratic participation and deliberation to government by technocrats.

As other states, like Wisconsin and New Jersey, look to Michigan as a model for addressing local fiscal crises, it is my hope that policymakers take a critical look at not only the fiscal dimension of municipal takeover but also the political dimensions. These policies are intended to be temporary but, as the Flint case suggests, there are longer-term political implications, both structural and interpretive, for local urban democracy.

Author: Ashley E. Nickels is the Thomas W. Smith research associate in the Department of Political Science at Miami University. Her research examines how urban policies, especially community and economic development and local fiscal policy, shape local democracy. Email: [email protected].

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One Response to Michigan’s Municipal Takeover Law

  1. Brandon B Reply

    February 22, 2016 at 9:57 pm

    As a resident of Michigan, having grown up just north of Flint, and a public administration major/practitioner, I find this article affects me both personal and professionally. The state has overtly subverted democratically elected officials in the name of efficiency and financial recovery. This, to me, is wring on both a constitutional level as well as an ethical one. This case exemplifies the problematic aproach of municipal takeover and I think that it should never be a last resort. It should never be resorted to in the first place. If a city is in need of relief then by all means a state should move to help that city but in the fork of advisors/mentors to help guide those officials in solutions or best practices to aid in their recovery. It should not be a takeover as shown by the callous management of Flint and the resulting consequences of economic decisions elevated above constituent welfare. We now have children with long term health effects from the technocrats takeover. A shame and one that should not be emulated in any state.

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