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Chances for appeal success of Detroit emergency financial manager decision are slim

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History can teach us a lot, and we can learn a lot about the future of Detroit from it as well.

Looking at news reports and initial reaction, there may be lawsuits and other challenges to Governor Snyder’s announcement that Detroit will get an emergency financial manager, but the reality is this drama has played out before. Flint tried to go the judicial challenge route after the appointment of its emergency financial manager and the judge sided with Governor Granholm.

Turns out that outside of the appeal process there probably isn’t realistically much legal recourse for the city council or other emergency financial manager opponents.

Why? According to the law, there’s only two ways a judge would overturn a governor’s decision. That would be if the EFM was put in place because of an “arbitrary” decision by the governor, or if there was insufficient evidence.

According to the Michigan Department of Treasury, there are currently four local governmental units and three school districts in receivership and have an appointed emergency financial manager.

After the announcement, we talked with Steve Liedel, a senior counsel at Dykema and former chief legal counsel to former Governor Jennifer Granholm, to get his perspective on that very point.

Steven Liedel“If the Governor had said, ‘I don’t like the color of the ties of the city council’ – if that were the basis that would be clearly arbitrary. If it’s based on hard data, something like that is likely to meet the statutory requirement,” said Leidel.

“With the separate branches of government, the courts are going to generally defer to a governor’s determination. That was the situation when it was litigated in the past in the case of Flint,” he added.

Here’s something you may not know. Emergency financial managers aren’t new. In fact, this has been challenged and litigated in different ways and versions for more than 20 years. Although the heat is turned up today because of the announcement and the population size of Detroit, there are precedents dating all the way back to Governor Blanchard, a Democrat, who in 1990 signed the first law.

To those who might think the federal government may step in and stop the process, if it hasn’t happened up to now, there is little chance it will happen here. Many municipalities across the country have gone through similar situations where the state government has had to step in, just not on the same population scale as Detroit. Research turns up no instances in the past where the federal government has stepped in to remove a state-appointed manager.

There will be many political machinations. But the long-term reality is, after the set approval process, Detroit will mostly likely have an emergency financial manager in place.

Governor Snyder made it clear in his town hall when he said, “I think (elected officials) are going to have an opportunity to define (their role) … If people just want to yell and say it doesn’t work and not come up with any solutions, I’m not going to expect they will have a lot of influence.”

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