Republicans Favor Less Government Except in Distressed Cities

  • Governors in Illinois, New Jersey push state takeovers
  • "What's the exit strategy?" needs to be answered of managers

Republican gubernatorial candidate Bruce Rauner declares victory on Nov. 4, 2014, in Chicago, Illinois.

Photographer: John Gress/Getty Images

The Republican refrain is that the best government is a small government, and that it shouldn’t meddle in local affairs. Except when cities in Republican-ruled states are in trouble.

Illinois Governor Bruce Rauner is pushing for a takeover of the Chicago school system, which is hemorrhaging cash, and his counterpart in New Jersey, Chris Christie, just reached a deal with a top-ranking Democratic legislator to give Trenton more control over Atlantic City, which could be out of money as soon as April. 

In Michigan, Rick Snyder was ahead of them: he signed a law in 2012 expanding the authority of state-appointed emergency managers who called the shots in several cities, including Flint, where the water system is contaminated.

The governors have said drastic action is necessary, and state intervention the only option after years of failure by local officials -- in many cases Democrats -- to protect their citizens. Critics of a state taking command don’t like the strategy no matter which party’s behind it, but a bigger government seizing power seems not to mesh with the GOP platform.

“It doesn’t fit with the Jeffersonian view of democracy in which you govern at the level closest to the people,” said Marick Masters, a business and political science professor at Wayne State University in Detroit. “Essentially when the state comes in and takes it over, and when you appoint one person and give them extraordinary power, that reeks of anything but democracy.”

Lowest Rated

The three governors are grappling with deep-seated problems in cities. And the states are facing their own tough issues. Illinois and New Jersey are the lowest and second-lowest ranked U.S. states by credit-rating companies, as escalating public-pension obligations pressure their finances. Michigan is trying to rebuild from the sharp decline of its manufacturing base; Detroit filed for bankruptcy in 2013. The water crisis in Flint -- which has been in and out of the state emergency-manager system since 2002 -- is “emblematic” of Michigan’s challenges, Standard & Poor’s said this week.

That state’s oversight program is among the “most aggressive” in the country, said Eric Scorsone, director of the Center for Local Government Finance and Policy at Michigan State University in East Lansing. In 2011, the Republican-controlled legislature passed a bill allowing state emergency managers to overturn labor contracts and seize other legal authority in financially troubled cities and school districts. Voters approved a repeal of the law, but it was replaced by a similar one in 2012 that gave local officials some options to challenge the state managers.

Exit Strategy

Flint’s an example of the drawbacks of intervention, said Scorsone, who is advising the city’s elected officials. It was the state that oversaw the decision to change the source of its water to a polluted river supply to save money. Complaints went unheeded for months. The Federal Bureau of Investigation has joined a probe of the contamination.

“You come in, you balance the budget. You make draconian cuts. What’s your exit strategy?” said Wayne State’s Masters. “It often requires a lot more than just rectifying the books to put a city on a path of sustainability.’’

Snyder, who has been in office since 2011, has said the rescue policies provide tools needed to “protect the health, safety and welfare of residents and ensure children receive a first-class education.” In the wake of Flint, he’s pledged a comprehensive effort to improve the city’s quality of life for generations.

Budget Impasse

Chicago’s school system, the nation’s third largest, is running out of cash after years of raiding reserves and shortchanging pensions, which has caused the unfunded liability to balloon. The district relies on borrowing to cover budget gaps.

Rauner earlier this month called for the state to take over the district and potentially authorize bankruptcy, which currently isn’t allowed. The governor -- who’s locked in an impasse with the Democratic-controlled legislature that has left Illinois without a budget this year -- has said Chicago Mayor Rahm Emanuel wants money from the state without reforming the system.

Catherine Kelly, a spokeswoman for Rauner, pointed to comments he made Wednesday, where he called the school system “a financial disaster.” State appointees, and possibility bankruptcy, would keep schools open and teachers in the classrooms, he said.

“We can protect our children and their education and still protect taxpayers,” said Rauner, who last month spoke of the need of "empowering local communities" in the state to streamline government for savings.


Little Success

State takeovers across the country, particularly with school districts, have yielded little success since little additional resources are ever devoted to the problems, said David Merriman, co-director of the Fiscal Futures Project at the Institute of Government and Public Affairs at the University of Illinois.

In New Jersey, Christie, a presidential candidate who has called for “less government being intrusive in our lives in every way,” appointed an emergency manager last year for Atlantic City. Home to 39,000 on the sea, it’s been upended by an expansion around the country of legalized gambling. The city could soon be in the red, in the wake of the closure in 2014 of one-third of its betting parlors.


Mayor’s Support

The emergency manager left in January, after releasing a report that recommended more spending cuts and consolidating services. That could be more easily done if a state oversight agency wins unprecedented control over the city’s decisions, which Christie wants for five years. Mayor Don Guardian and city council members agreed to work on state legislation that would authorize this with Senate President Steve Sweeney.

Joelle Farrell, a spokeswoman for Christie, pointed to the governor’s comments last week, where he said he considered intervention five years ago but decided on just a state-run tourism district.

“We wanted to give Atlantic City a five year opportunity to have some of these problems work out on their own, they did not,” Christie said. “So now we need to take those stronger steps to intervene and to work as partners with the mayor going forward.”

Christie has stepped up the state’s role in other distressed areas. Camden, whose manufacturing collapse set it on a path to become the most dangerous U.S. city, was already under state oversight dating back to 2002 when Christie took over its school district three years ago. In 2013, he disbanded the city’s police department in favor of a regional system.


Grim Alternative

“Democracy in the city of Camden has been decimated -- in Atlantic City, it will be, too,” said Raymond Lamboy, a former Camden schools trustee who is a Democrat.

Atlantic City’s “unique” case tests the state’s commitment to local control, said Carl Golden, who worked in the administrations of two Republican former governors of New Jersey.

“It may go across the grain ideologically or philosophically with Republicans but at the same time, the alternative was so distasteful -– let it sink on its own or dump god only knows how much money into it year after year,” said Golden, a senior contributing analyst with the William J. Hughes Center for Public Policy at Stockton University.

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