PONTIAC, Mich.—To get to city hall, you drive up I-75, past the empty Silverdome where the Detroit Lions used to play, and into a nondescript concrete municipal building. The city clerk was laid off a few days ago, but the door to her office hangs open. The mayor, Leon Jukowski, gives me a brief tour of the desks where people no longer work. Cubicles sit empty, little tchotkes and calendars left behind when their owners were laid off.
“At one time we had 800, 900 city employees,” says Jukowski. “We have 150 now. And we have the same services that we always had.”
The unemployment rate in Pontiac is pegged at 25 percent. In 2009, as GM restructured under a government bailout, it shuttered its plant in Pontiac and ceased production on the line of cars named after the city, calling it a “damaged brand.” So what happens to the people that the city lays off?
“Some of them go on unemployment,” says Jukowski. “Some of them, like the police, keep their jobs because they merge with the county. Most of them are out on the street. In a city of 59,000, the issue of city jobs going away isn’t the major break[ing point]. It doesn’t help. But we’re a town that used to have an automotive industry. We had more money coming in than we knew what to do with, so we didn’t really have to be real serious about city government. People began to view city government as a job creator; a jobs bank, if you will. We tended to look at development projects, city government, everything as an opportunity to put local people to work, instead of as an opportunity to create infrastructure, provide services.”
The short tour ends at the office of Jukowski’s boss. Jukowski, elected in 2009, does not run the city of Pontiac. That is the job of the “emergency manager,” a state-appointed technocrat who has the power to do basically anything he needs to if it’ll set the city right. Under this system, the City Council isn’t paid. Jukowski is paid as a consultant—$30,000 a year for a job that used to pay six figures—answering to Emergency Manager Louis Schimmel. He was a fellow at the Mackinac Center, Michigan’s free-market think tank; the mayor is a Democrat. Jukowski is fine with this. “I ran,” he says, “because I just got sick and tired of watching the city go sideways.”
If you don’t feel like sugar-coating it, the emergency manager—Pontiac is one of three Michigan cities currently run by one—is an admission that democracy occasionally doesn’t work. Michigan introduced an emergency “financial” manager law in 1990, as a way to straitjacket cities that were failing. Schimmel made his reputation running turnarounds in the small, benighted cities limning Detroit. He succeeded, largely, but he was frustrated by limits.
“When I was running Hamtramck, for example, the unions could drag me out for years,” says Schimmel. “They'd say, ‘We don't have to settle with you.’ And they didn’t. They could delay and delay—they could schedule meetings then cancel them as they were about to start. They could take me to arbitration. I had to spend a lot of time dealing with union contracts.”
That changed this year. Gov. Rick Snyder, a Republican, and a GOP legislature passed Public Act Four, which changed the “emergency financial manager” to an “emergency manager,” giving him a slew of new powers. He can “terminate 1 or more terms and conditions of an existing collective bargaining agreement.” He can “make, approve, or disapprove any appropriation, contract, expenditure, or loan, the creation of any new position.” The changes track closely the recommendations of a report on reforming the “emergency managers” law, published by Mackinac in January 2011, co-authored by one Louis Schimmel.
Schimmel arrived in October, estimated the budget deficit at $12.5 million, released his plan, and announced his targets—pensions, public services. “The City,” he wrote in the plan, “has engaged in activities and made promises that the City did not have the ability to properly manage or financially support.” So the police department was given over to Oakland County. Schimmel just ignored the community-activist protests over that one. If everything pans out, the fire department will be paired up with that of neighboring Waterford’s, flattening out the costs. The law department was shuttered. The shrinking number of public employees are going to get smaller benefits.
Pontiac was ready for this, sort of. It had been run by the old sort of emergency czar since 2009. There was Fred Leeb, who didn’t have expansive powers, then a roving turnaround experiment named Michael Stampfler. Leeb says he was on the right track and was doing better in Pontiac than the new guys are doing. “The new emergency manager’s trying to portray Pontiac as this god-forsaken city that’s hopeless,” says Leeb. “You can’t cut your way to success, and you can’t tax people to death when they don’t have means.”