POLITICS OR PROFESSIONALISM TO THE RESCUE? THE FRIEDRICH-FINER DEBATE IN THE CONTEXT OF STATE INTERVENTION IN MICHIGAN.

Author:Wang, Shu
 
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"I don't even let my dogs drink this water." (Holtstander, qtd. in Associated Press, 2015). In April 2014, in an effort to save money, the City of Flint, Michigan changed the source of its drinking water from Lake Huron (via the Detroit water system) to the Flint River. What happened shortly after the transition was a public health crisis: lead had leeched into the City's drinking water. Although cities across the United States had faced public health crises in the past, this crisis was unique in that it occurred while Flint was under the supervision of a state-appointed Emergency Manager, who was brought in to solve years of financial problems in the City (Hanna-Attisha, LaChance, Sadler, & Schnepp, 2016). What had been intended as a professional intergovernmental intervention to improve Flint's financial health turned into a rallying cry against such interventions in favor of local political control. The water crisis raises the question: In the broader context of American federalism, when a local government struggles and the state government steps in, who should be held accountable for local affairs?

The ultimate goal of an accountability mechanism in a democratic system is to ensure responsiveness by government to citizens' needs and demands (Dunn & Legge, 2001). Defined as government's delivery of its promises (Kettl, 2000), accountability becomes a complicated issue in policy implementation when multiple actors are involved. State-local relations add further complexity to the issue. Decentralized governments are created to enhance efficiency in public service delivery and democracy (Oates, 1999). With better knowledge about local constituents' needs and demands, local governments can tailor the outputs of public goods and services based on their preferences (Oates, 1972). Through decentralization, local voters can also have democratic control over local governance, and hold local officials accountable. At the same time, when decentralized governments run deficits, they can ask for bailouts by central governments (Oates, 2008). In the United States, local governments are creatures of the state who has constitutional right and moral responsibility for local affairs. A number of states have made laws to intervene in local affairs as a way to safeguard the welfare of local constituents when local governments fail to do so (8). Despite of the good intention, the implementation of state intervention often faces local resistance and distrust. In Michigan, the Governor can appoint an emergency manager to fiscally distressed communities. Tasked to eliminate deficits and balance the budget, the manager has the authority to terminate labor contracts, restructure departments, and even to dissolve local government bodies. A main criticism of emergency managers is the lack of democracy in the process--since the manager is appointed, local voters have no control over a position with sweeping power that can make drastic changes to local affairs.

This clash highlights elements of a classic debate between Carl Friedrich and Herman Finer in the field of public administration: to ensure government accountability, should we follow Friedrich's advocate for professionalism, or adhere to Finer's belief in elected officials' control? This paper explores a special case of local government accountability. Guided by the theoretical framework of accountability laid out in the debate between Friedrich and Finer in the 1930s, we examine the different perspectives of accountability between state-appointed emergency managers (9) and local officials in the process of state intervention in Michigan.

The study contributes to the field of public administration by shedding new light on the implications of Friedrich-Finer debate in the context of American federalism. The debate reveals the complexity of accountability in a modern society where both professionalism and democratic control are needed for administration. Scholars like Dunn and Legge (2000) have added to the literature by exploring how managers view their responsibilities to various stakeholders at the local level. State-local relations, however, add another dimension to the issue, especially when local governments are under state intervention and run by state-appointed managers. The paper also bridges the gap between public administration and public finance literature. Public finance scholars often take an economic approach to examining local fiscal distress. However, policies like state intervention involve various actors whose behaviors affect policy outcomes. In this study, we take a behavioral approach to public financial management, and highlight the importance of accountability as a public value in addition to economic efficiency. Given the prevalence of state intervention in fiscally distressed communities, the findings have practical implications and can inform policymaking.

STATE INTERVENTION IN LOCAL FISCAL AFFAIRS IN MICHIGAN

Having evolved over three decades, state intervention into local fiscal affairs in Michigan has always struggled to maintain a fine balance between state oversight and local autonomy. Public Act (PA) 101 of 1988, titled the "Local Government Fiscal Responsibility Act," was the first policy that allowed the state to appoint emergency financial managers to address local fiscal affairs. PA 101 was replaced just two years later by PA 72 of 1990, which added a state ability to address school district financial difficulties and remained in place for over two decades. Under PA 72, a Financial Review Team was appointed if the Governor determined that there was a serious financial problem in a local government, including the failure to pay creditors, the failure to make timely pension contributions, and missing payroll. Certain officials and local residents could also request a preliminary review under the Act. A major complaint regarding PA 72 was that it was rarely applied and toothless, with only 12 municipalities/school districts coming under purview of the law from 1990-2012 (Scorsone, 2012).

To strengthen state authority in local fiscal affairs during intervention, PA 4, titled "the Local Government and School District Fiscal Accountability Act," was passed in 2011 and effectively replaced PA 72 of 1990. The main goal of the legislation was to aid local units of government by providing state oversight and support. It allows for more state intervention by using a broader system of financial distress indicators, which would hypothetically give the state more indication of a potentially distressed municipality as compared to PA 72. The main controversy of PA 4 was related to the power vested in emergency managers, who had authority to make broad and sweeping changes to the municipality he/she was charged with reforming, including: terminating city contracts, making decisions in school districts in regards to academics, and dissolving local government bodies.

Shortly after PA 4 of 2011 was signed into law, various progressive coalitions began to collect signatures to hold a referendum on the law via a state ballot initiative (Oosting, 2012). The signature drive was successful, and the referendum resulted in a repeal of PA 4. The state legislature quickly took action in response to the repeal. During the 'lame-duck' legislative period immediately following the ballot referendum, both the State House and Senate passed PA 436 of 2012, "the Local Financial Stability and Choice Act." In response to the criticism of PA 4, PA 436 has several key differences from PA 4; local boards have the option of removing the financial emergency manager after 18 months, the state must pay the costs of emergency managers, and finally, localities are given options besides an emergency manager that they had previously not been granted. These options include filing for bankruptcy, entering into a consent agreement, choosing an emergency manager, or having a neutral third-party evaluation.

Local elected officials are given the right to choose between these options. However, the powers which emergency managers were given by PA 4 remain intact. Equally important, the non-emergency manager options have rarely been chosen, and when chosen, are in small municipalities. Further, the Governor's office has to agree to such a choice from local municipalities. Compared to PA 72, PA 436 has provided the state with more oversight and tools. Compared to PA 4, it also gives local units more options to address fiscal distress. However, controversy remains, particularly related to emergency managers. Some criticize it as a blatant power grab, seeking to expand gubernatorial powers at the expense of local elected officials. These same sources have been quick to label the law as a direct affront to democracy, and even dictatorial. Others argue that the bill provides necessary oversight to clearly struggling municipalities and school districts where local elected officials have proven either incapable, or unwilling to 'right the ship'. Facing fiscal distress, who should citizens hold accountable, local officials who represent their interests through elections, or state-appointed managers that bring expertise? This study applies theories of accountability to state intervention in local government fiscal affairs in Michigan, and examines the complexity of accountability in the context of federalism.

ACCOUNTABILITY AND THE FRIEDRICH-FINER DEBATE

The history of state intervention in Michigan shows a struggle to maintain balance between state oversight and local autonomy. It raises the question of accountability for local affairs --should the government utilize professionalism to ensure efficiency and effectiveness, or should it rely on local democratic control? One may find answers in core public administration theories. In this section we first discuss how accountability is defined through the relationship between politics and administration, and then review the debate between...

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