By Tony Wittkowski | Business Reporter | The Herald-Palladium
BENTON HARBOR — Benton Harbor officials have control over the city’s finances again after the Benton Harbor Receivership Transition Advisory Board adjourned for the last time Thursday.
The four-member board, which was in charge of approving all items city commissioners passed before they could go into effect, agreed to send its recommendation to Gov. Rick Snyder to effectively end the state-appointed receivership. There was no confirmation the recommendation was accepted Thursday, but Snyder told The Herald-Palladium on Wednesday he was confident the state’s Treasury Department would sign off on the receivership.
It’s been more than two years since Benton Harbor last had an emergency manager, and the R-TAB was among the last layers of the state government’s control over the city. The R-TAB was appointed by Snyder after former Emergency Manager Tony Saunders II vacated the position in March 2014.
City Manager Darwin Watson said he believes the transition will be easier because the city has somewhat been operating on its own, even with the R-TAB in place.
“Most of the stuff we’ve done has been supported and approved by them. They’ve given us some latitude,” Watson said. “Decisions that have been made have been with oversight, but the oversight was not adversarial.”
Despite the R-TAB’s absence, the state treasury will still be required to sign off on any budget amendments Benton Harbor makes for the next year. That the R-TAB would be phased out became apparent when the panel began to cut back on its monthly meetings.
Watson has worked at the city since 1995, but took over as city manager after Saunders left. Watson said mistakes were made when the country’s economy was at its worst.
“The things that were put in place by emergency managers during the receivership have led to a lot of turnaround that we’ve had,” Watson said. “As an employee, we didn’t have any idea how bad it was. As it turns out, the city was spending $1 million more a year than we took in.”
Bret Witkowski, Berrien County Treasurer and R-TAB member, said he supports the receivership dissolving.
Witkowski said the city has made gains since then-Gov. Jennifer Granholm first declared a financial emergency for Benton Harbor in 2009.
“The city of Benton Harbor has done a phenomenal job,” he told city officials at Thursday’s meeting. “The millage rate is 6 or 7 mills lower than what it was, and you are positive in every account I have looked at. With that in mind, I would be happy to make a motion to end the R-TAB and hopefully the governor agrees.”
Following the R-TAB’s recommendation, Mayor Marcus Muhammad released a statement in support of what appears to be the end of the state’s oversight.
“…I express my gratitude to the Receivership Transition Advisory Board for its professionalism in transitioning the city of Benton Harbor from emergency management to local control,” the statement read. “I look forward to working with the office of the governor and state treasury to ensure financial solvency.”
Watson said he first heard that the R-TAB was considering an end to its receivership about three weeks ago. The city manager said R-TAB’s end has a deeper meaning for city employees and commissioners.
“The perception of oversight makes people a little apprehensive and makes them a little bit anxious because in your mind’s eye, you’re not making you’re own decisions,” Watson said after the R-TAB meeting. “This is a chance for the commission and staff to leave a legacy here in the city as it relates to making sure we hold the line.
“We have an opportunity to avoid replicating the ills of the past. It’s going to be a chance to blaze our own trail.”
Prior to recommending an end to receivership Thursday, R-TAB members voted to rescind two emergency manager orders that cut benefits to nonunion workers. The orders eliminated 12 holidays for nonunion workers and turned them into furlough days.
Watson said because of a reduction in staff, the number of affected workers has dropped to nine. He said adding back holiday pay would cost the city about $25,000.
How it all started
When Snyder took office, one of the first bills he signed in 2011 was Public Act 4, which was seen as a stricter version of the previous emergency manager law.
Michigan voters rejected that law by referendum in 2012, only to see a new bill passed a month later. The new law made some changes to the original version, including requiring the state to pay the salary of an emergency manager and giving the local government the power to vote out an emergency manager after 18 months.
The most controversial change was tacking the law to an appropriation, insulating it from a referendum.
In an interview with The Herald-Palladium, Snyder said the law proved a success as the emergency managers helped get Benton Harbor out of the red.
“I think this is a success story of how the emergency manager can work. It’s not just what the emergency manager does, it’s how the people came together to solve problems,” Snyder said. “Usually what you find is it’s about addressing what’s usually long-term structural issues. Having people understand this is the only way to break out and get back on the positive path.”
Several Benton Harbor officials, including Mayor Muhammad, have voiced opposition to the law and the amount of control it gives to emergency managers.
State Rep. Al Pscholka, R-Stevensville, agreed with Snyder that the emergency managers did their job. Pscholka sponsored the bill that became Public Act 4.
“In Benton Harbor, we need to remember how close to bankruptcy they were. This was pretty dire,” Pscholka said. “Their finances were a mess. I know with some of the local folks, this hasn’t been a popular thing. I get it. I had the recalls and the death threats and everything else. I understand. But look at where they are now.”
There are no emergency managers overseeing any municipalities in Michigan.
The only active emergency manager is overseeing Detroit Public Schools, whom Snyder said is in the process of exiting. There are two other EMs at school districts – Muskegon Heights and Highland Park – but they are in what Snyder calls “wind-down situations.”
Snyder said the last thing he wants to do for a city is appoint an emergency manager.
“Hopefully, this exercise has really brought a focus on addressing the structural problems and having them put in a position where you can move forward successfully,” Snyder said. “I hope it brings more civic attention and people who are willing to learn from the past.”