By Karen Pierog
(Reuters) - A Michigan law giving the state more power over cash-strapped cities is under attack with nine local governments either under state control or inching toward it.
Those cities and school districts include the state's biggest city of Detroit and have sparked protests among groups who believe the increase in state managers running local governments circumvents the democratic process.
Four municipalities and Detroit's school system are currently being run by state-appointed emergency managers, tying a previous record for the number of local governments under state control at one time, according to a spokesman for the Michigan Treasury Department.
Four others are under review, including Detroit, whose state review was announced last week.
Greg Bowens, spokesman for Stand Up for Democracy, a coalition of groups opposed to the new law, said the state's action to take over Flint late last month and Friday's move to review Detroit have brought the matter into focus for residents, who are eager to sign petitions against the law.
"We just believe in democracy. We just believe two heads are better than one," Bowens said. "If someone is not directly accountable to the public that leads to more bad things."
Fiscal stress is a reality for a number of local governments in Michigan, which was hit hard by the U.S. economic recession that officially ended in June 2009, and which is still dealing with fallout from automotive industry restructuring.
Reduced tax revenue has squeezed local budgets, many of which are struggling with pension obligations. But cuts in services and pension payments can also hurt economic recovery even as a local government tries to gets its finances in order.
Michigan this year replaced a previous financial emergency law, Public Act 72, with Public Act 4, which made it easier for the state to intervene in a fiscally troubled government and beefed up the emergency manager's powers, including voiding contracts and collective bargaining agreements.
The manager essentially replaces the elected local government for the duration of the financial emergency.
"Public Act 4 is Public Act 72 on steroids," said Bettie Buss, a senior research associate at public policy group Citizens Research Council of Michigan, which has analyzed the new law. "It makes it very clear the emergency manager has operational responsibilities as well as financial responsibilities."
Some want to void that law as state intervention escalates. In September, a group of Michigan residents filed a lawsuit in Ingham County Circuit Court challenging the constitutionality of the law. Their lawsuit says the act "violates the right of local voters by delegating law-making power and the power to adopt local acts to unelected emergency managers."
Benton Harbor, Ecorse, Flint, Pontiac and the Detroit Public Schools are currently being run by state-appointed emergency managers after state reviews of their finances.
Reviews of the cities of Detroit and Inkster were announced by the state treasurer on Friday, while reviews of school districts in Highland Park and Benton Harbor are ongoing.
John Philo, legal director for the Sugar Law Center for Economic & Social Justice in Detroit, and a co-counsel for the plaintiffs, said the law disenfranchise voters.
U.S. Representative John Conyers, a Michigan Democrat, last week called on U.S. Attorney General Eric Holder to review the law for potential violations of the U.S. Constitution's Contract Clause and of the Voting Rights Act. A spokeswoman for Holder said the Justice Department is reviewing the letter.
A petition drive to place a repeal of the law on the November 2012 ballot is under way. Bowen said it is 80 percent toward the goal of collecting 161,000 valid signatures by March.
Reverend D. Alexander Bullock, who heads the civil rights group Rainbow Push Michigan, said the Republican-controlled state government is targeting cities like Flint and Detroit, which have big African American populations that largely vote Democratic.
"You just see these flags," he said. "If this were a football game I believe there would be a lot of yellow flags on the field."
Detroit would be the biggest government ever in the state with an emergency manager -- a step Republican Governor Rick Snyder's Administration has stressed would be a last resort.
"All we have in Detroit is a fierce sense of our self determination. Take that away and people are going to fight back," Bullock said.
(Reporting by Karen Pierog; Editing by James Dalgleish)