Kevyn Orr now runs Detroit. His authority is broad and unrestricted. He can hire and fire city employees. He can sell public assets. He can privatize public services. He can issue private orders that have the force of law. He can scrap existing laws. He can break contracts with unionized city workers. He can decide the level of services that the city will provide residents. His authority supersedes the mayor and city council, and he can make his decisions in private without being subject to open meetings laws.
Orr, a corporate attorney who is now Detroit’s Emergency Manager, was not elected by the voters of Detroit. He was appointed by Michigan Gov. Rick Snyder.
On March 28, the day that Orr assumed his position, a group union leaders, clergy, elected officials, and Detroit residents filed suit in federal court to challenge the law that made Orr’s appointment possible.
On the same day, protestors marched through the streets of Detroit to the courthouse where the suit was filed. They then marched to City Hall where a group of about 100 tried to meet with Mayor Dave Bing to urge him to fight the governor’s takeover of the city.
Al Sharpton, the leader of the National Action Network, which helped organize the march and demonstration, called Snyder’s takeover of Detroit unconstitutional and said that the emergency manager law had dangerous implications.
“There will be a threat to everyone in this nation if the emergency manager law stands,” Sharpton said. “This is a local issue, but a national struggle. If you can get away with it (in) Detroit, you can do it all over the nation. We are going to fight until this is overturned, because in effect what you’re saying is when the mayor and city council is elected (another higher official) can negate the election by imposing an emergency manager.”
Herb Sanders, one of the attorneys working on the suit, said that court action won’t be enough to defeat the emergency manager law. “Our efforts in court will not be successful unless the judge can look out his window and see thousands of people in the streets, said Sanders. “As Dr. Martin Luther King, Jr. said, this is not the time for cooling off, but the time for getting hot, heated and upset, the time to take action. It is time for drastic measures.”
Gov. Snyder appointed Orr under authority of Public Act 436, which the Michigan Legislature recently passed during a lame duck session. Last November, a similar law allowing for the appointment of emergency managers when municipalities face a financial crisis was rejected in a state referendum by a margin of 53 percent to 47 percent.
After voters rejected the law, Gov. Snyder submitted to the lame duck Legislature another version of it designed to prevent another referendum. The Legislature passed the law and Gov. Snyder signed it.
Mayor Bing in 2011 declared a financial emergency. Detroit’s emergency was caused by a declining manufacturing tax base, the Great Recession, which lowered revenue, and a reduction in state revenue sharing funds.
After declaring the emergency, the mayor’s administration negotiated with a coalition of unions representing city employees for contract changes that could save the city money. The coalition agreed to concessions worth hundreds of millions of dollars, and in March 2012, union members ratified the agreement.
According to the lawsuit challenging the state’s emergency manager law, after union members ratified the concessions, Gov. Snyder told the mayor that if his administration continued to bargain with the unions, Gov. Snyder would appoint an emergency manager to take over the city.
As a result, the mayor and city council refused to sign off on the agreement.
Gov. Snyder also demanded that the city negotiate a consent agreement with the state outlining various employment terms. Subsequently, the city imposed wage and benefit cuts on union workers that went beyond those stipulated in the original agreement.
But that wasn’t enough, and Gov. Snyder appointed Orr to take over the city.
Orr was until his appointment a partner in the corporate law firm of Jones Day, which is providing restructuring services to the city. According to suit, Jones Day’s contract with the City of Detroit makes it a contractual creditor with the city.
Jones Day also represents Bank of America and other financial institutions that have a stake in how the city manages its financial emergency.
Orr’s main qualification is that he participated in the restructuring of Chrysler, but Harriet Rowan reports that he owes $10,000 in tax liens on his $1 million home in Maryland.
“It is quite interesting that (Orr) feels he could manage the City of Detroit, and he’s having trouble managing his own affairs,” said the Reverend Charles Williams II, president of the National Action Network of Michigan.
Rep. John Conyers said that emergency managers have done little to help local governments struggling with financial problems. “It is difficult to identify a single instance where an emergency manager has succeeded in turning around the financial fortunes of a city or jurisdiction,” said Conyers. “The history of the emergency manager law in Michigan is replete with fiscal mismanagement and conflicts of interest.”