Accepting, as Opposed to Avoiding Responsibility for Municipal Fiscal Distress & Putting Kids’ Health at Risk

March 24, 2016. Share on Twitter

The Hard Road of Municipal Bankruptcy. San Bernardino Mayor Carey Davis has vetoed a San Bernardino Council measure to continue municipal funding of the city’s last remaining job training center—a center therefore now slated to close next week, because of concerns the bankrupt city can no longer afford the $125,000 per month to keep it in operation. The move, in one sense, was not a surprise: the San Bernardino Employment and Training Agency has been on its last fiscal legs since October 2014, when the State of California cut off funding after San Bernardino failed to meet deadlines to audit its books; nevertheless, Council members had repeatedly renewed funding, perhaps in Don Quixote dreams that the state would reimburse the city: thus, the city, notwithstanding its bankrupt status, has expended some $2 million for the center dating back to October of 2014—spending nowhere to be found, much less accounted for in its proposed plan of debt adjustment pending before U.S. Bankruptcy Judge Meredith Jury—unsurprisingly educing a warning from San Bernardino City Attorney Gary Saenz that the city’s creditors could take umbrage. The bankrupt city, reeling under pressure from the State to complete its 2013-4 Comprehensive Annual Financial Report before lifting its cash hold, appears to have put itself between a rock and a hard place, as its failures to meet fiscal reporting deadlines have now jeopardized state assistance to provide critical job training funding—funding which, notwithstanding the Council majority’s vote, it simply does not have. The dilemma, as Councilman Henry Nickel deftly sized it up: “I can think of nothing better we should be doing as a city than helping people who are unemployed find work, become productive, and contribute…That to me is the basis of getting back on track…” (Under the city’s charter, the mayor is granted the authority to veto decisions which receive fewer than five “yes” votes.) In describing his decision to his colleagues, Mayor Davis indicated his apprehension with regard to the potential impact on the city’s budget and its pending plan of bankruptcy adjustment gave him little alternative.

In a city where more than 50 percent are receiving public assistance, the job training program’s loss will add to the steep road to long-term recovery—and will likely impose greater demands on the surrounding County, where its board would, presumably, assume responsibility from the San Bernardino Employment and Training Agency, depending upon final state decisions.

Out Like Flint: State Accountability to a Municipality & Its People. A task force appointed by Michigan Gov. Rick Snyder to investigate the drinking water contamination in Flint which has affected and endangered so many young lives yesterday released a withering report with 44 recommendations to improve state government policies and performance and to prevent similar crises from happening in other cities across the state, made clear the State of Michigan is “fundamentally accountable” for the City of Flint’s lead-contaminated water crisis because of decisions made by its environmental regulators and gubernatorially-appointed emergency managers who controlled the city, terming what happened in Flint to be “a story of government failure, intransigence, unpreparedness, delay, inaction and environmental injustice,” citing “intransigence and belligerence that has no place in government.” The scathing report described as “inappropriate” a frequent claim of Gov. Snyder and his representatives that the Flint water crisis represented a failure of the local, state, and federal governments—instead asserting: “The State is fundamentally accountable for what happened in Flint.” Among its recommendations, the panel wrote:

 Change the Department of Environmental Quality’s culture to focus primarily on protecting human health and the environment. Step up enforcement of safe drinking water rules without waiting for direction from the federal government. Make sure DEQ water management personnel have adequate training and experience.
 The governor’s office should improve its information flow, be more receptive to information that contradicts official positions and respect its critics.
 Test more children for lead; improve the reporting and analysis of results.
 Look for ways to compensate for the loss of checks and balances in cities with state-appointed emergency managers, perhaps allowing for appeals of their decisions. Make sure managers have adequate support and expertise.
 Assume a continued presence in the Flint water system of bacteria that causes Legionnaires ’ disease, and take steps to reduce the risk of further outbreaks.
 The U.S. Environmental Protection Agency should respond faster and more vigorously when violations of federal drinking water regulations endanger public health and improve its rule on lead and copper contamination.
 Provide extensive recovery assistance to Flint, including health care for children whose blood has been tainted with elevated levels of lead since the city switched its water source in 2014.
 Develop a statewide program to replace lead pipes and upgrade other water infrastructure. Establish a new cabinet-level post focused on public health.

Lessons Learned
Chris Kolb, co-chairman of the Flint Water Advisory Task Force, noted: “One of the biggest lessons we hope to impart in our report is the need for government leaders to listen to their constituents; in Flint that didn’t happen.” While investigators primarily blamed the state Department of Environmental Quality for the disaster—they initially did so in preliminary findings that led the agency’s director to resign last December — they also faulted a host of other government offices and officials for contributing to the fiasco or delaying action to fix it. Those include the Michigan Department of Health and Human Services, the U.S. Environmental Protection Agency, the Genesee County Health Department, the City of Flint, and Emergency Managers whom Gov. Snyder named to run the city of nearly 100,000 people.

The five-member task force interviewed 66 people during its months-long investigation and made a number of recommendations, including considering alternatives to the state’s emergency manager system. The task force reported that Michigan’s environmental agency erred in numerous ways: misinterpreting federal regulations; instructing the City of Flint not to treat its water with anti-corrosive additives after switching from the Detroit water system—which drew from Lake Huron—to the Flint River. The task force reported that the Michigan Department of Environmental Quality did not change course—even after an initial six-month testing period revealed elevated lead levels. Further, the Department provided inadequate guidance to Flint staffers on water sampling, snubbed offers of EPA assistance, and dragged its feet with regard to investigating the possibility that the city water system may have contributed to an outbreak of Legionnaires ’ disease. Noting that while there were others who contributed to the health care crisis, the report, unlike Flint’s water, was crystal clear: “MDEQ caused this crisis to happen…Moreover, when confronted with evidence of its failures, MDEQ responded publicly through formal communications with a degree of intransigence and belligerence that has no place in government.”

Emergency Manager Law. Notwithstanding its charge to address Flint’s drinking water crisis, the task force also turned to Michigan’s controversial Emergency Manager Law, a state law, enacted and modified twice with the support of Gov. Snyder and the state legislature, recommending the law should be reviewed, concerned that the state law removes the kinds of checks and balances in a democratic system which could have scrutinized or prevented deadly decisions made by a series of four Governor-appointed Flint Emergency Managers, finding that, in Michigan’s second-largest minority-majority city, the state actions had amounted to “environmental injustice” in a place beset with poverty and slumping property values. Or, as an editorial in the Detroit News this morning described it: “The state — and, by obvious extension, the governor — shoulders the bulk of the responsibility for the fiasco that tainted the city’s drinking water with lead and for too long ignored likely connections to an outbreak of Legionnaires’ disease that killed 10 people and sickened 87…The state’s Department of Environmental Quality failed to enforce safe drinking water regulations, the Department of Health and Human Services failed to ensure public safety, and a succession of four state-appointed emergency managers botched a series of decisions that could not be vetted by elected officials in Flint.”

Nevertheless, despite the state and congressional hearings, task force reports, and the evidence found in more than 43,000 pages of state documents, the questions with regard to responsibility and accountability with regard not only to the forever destroyed young lives, but also state—and local—accountability, one should expect more to come: Michigan State Attorney General Bill Schuette, the U.S. Justice Department, and the FBI continue investigations which could culminate in both civil and criminal charges; separate civil litigation is underway. The investigation did not explore the culpability of Congress and its decisions to make deep cuts in federal safe drinking and wastewater funding. The report was specific: “Though it may be technically true that all levels of government failed…the state’s responsibilities should not be deflected. The causes of the crisis lie primarily at the feet of the state by virtue of its agencies’ failures and its appointed emergency managers’ misjudgments.”

Putting Atlantic City into Bankruptcy: the Blame Game. New Jersey Gov. Chris Christie, no longer on the GOP Presidential campaign trail, is pressing state Assembly Speaker Vincent Prieto (D-Secaucus) to support a Senate-passed Atlantic City intervention bill, “The Municipal Stabilization and Recovery Act,” warning that failure to do so could lead to municipal bankruptcy of the gambling hub. Speaker Prieto, however, has opposed the bill, because it would empower New Jersey’s Local Finance Board to renegotiate contracts of Atlantic City workers for up to five years—and would also allow the state to alter outstanding municipal debt and reorganize or consolidate government operations to achieve cost savings—that is, it would preempt local control and authority. Gov. Christie has also been pressing the House to act on Senate-approved companion legislation to enable Atlantic City’s eight remaining casinos to make payments in lieu of taxes over a 10-year period. Gov. Christie Tuesday made clear he would not tolerate changes to either bill, noting: “If both bills do not come to my desk in exactly their current form, I will not sign them…If the legislature were to just send me the PILOT bill, I will not sign it. And if what that means is that Atlantic City goes bankrupt, then go to Vincent Prieto’s office and ask him why.”

In a further attack on Atlantic City Mayor Don Guardian, Gov. Christie added: “I am not opening the treasury of the State of New Jersey to people who cannot manage their affairs responsibly…I am no longer going to allow the taxpayers of the state of New Jersey to be responsible for the irresponsible decisions made by mayors before Mayor Guardian and Councils, and put a Band-Aid on this issue.” With the City scheduled to shut down essential municipal services for three weeks beginning next month to preserve critical cash flow, Speaker Prieto criticized Gov. Christie, emphasizing that the governor, rather than helping, has instead already vetoed bills that could have helped Atlantic City, noting: “If the Assembly decides to move a bill and the governor vetoes it, then it’s entirely the Governor’s fault, once again…The fact of the matter is the Governor already has the authority to help Atlantic City avoid financial catastrophe, and collective bargaining agreements must be protected.”


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