Michigan’s ‘Financial Martial Law’- Coming Soon to Wisconsin?

In March, the Michigan legislature passed, and Republican Governor Rick Snyder signed into law a bill one GOP lawmaker referred to as “financial martial law.”  In a nutshell, it allows the governor to appoint “emergency financial managers” to run local governments- elected officials notwithstanding. The elected officials can call meetings, approve minutes, and adjourn…and that’s about it!  The unelected managers can privatize city services, sell off assets, set aside union contracts, and consolidate or even dissolve local governments…all in the name of saving struggling cities and school districts.

There is no disputing that there are a number of localities and school districts in the state that struggling financially. That noted, can this new law be construed to be constitutional? Under Art. I Sec. 10 of the United States Constitution, states are prohibited from impairing contracts in most cases. (The federal government is not under this same prohibition.) This law is designed to prevent the local entity from going into bankruptcy, however it actually acts in virtually the same manner as a bankruptcy. Municipalities are allowed to declare bankruptcy by act of Congress, and bankruptcy is provided for in the Constitution.

For this reason, it appears that this law falls under the doctrine of preemption…that is, it’s something the federal government has already regulated, and state law cannot supersede it.  Ultimately, it will likely be the federal courts that decide the issue.

It seems that this law is, more than anything, a mechanism to set aside union contracts, and to take and resell assets to businesses that might profit handsomely from them. It has its roots in the Mackinac Center, an organization associated with the Heritage Foundation. A version of the bill has now surfaced in Wisconsin, and there will surely be others introduced in other states.

If this sort of law continues to spread, and is not struck down in the federal courts, the belief that a person’s vote counts may be severely diminished, if not eliminated. Who would have thought in the United States of America that elected officials you voted for could be swept aside and replaced by an appointed tsar?


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