Emergency Financial Management in Small Michigan Cities: Short-Term Fix Or Long-Term Sustainability?

Abstract

Emergency financial management is a relatively recent and unique form of municipal governance that is designed to address local fiscal crises by concentrating the decision making power in the hands of a temporarily appointed chief executive. In this paper, we examine practices of emergency financial management in three Michigan cities in the Detroit metropolitan area to understand the role of emergency financial managers in helping the cities to address chronic fiscal distress. Through the analysis of data from comprehensive annual financial reports, we show that emergency financial management tends to produce budgetary-level improvements in fiscal condition. We also discuss policies that can assist emergency financial managers in bringing longer-term fiscal health to struggling cities.