Flint water crisis reveals limits of running a state as a business

Michigan’s governor did something highly unusual Tuesday night: He apologized to a city.

“I’m sorry and I will fix it,” GOP Gov. Rick Snyder told the people of Flint in his State of the State address. “Government failed you at the federal, state and local level.”

Governor Snyder spent much of his address taking on the water crisis in Flint, where more than 8,500 children have been exposed to lead after the city, in a cost-saving measure, began pumping its supply from the Flint River in 2014. The corrosive water caused lead to leach out of pipes. Although the city switched back to sourcing its drinking water from Lake Huron in October, the water remains unsafe to drink.

In his speech, the governor, who has long billed himself as taking a pragmatic, business-like approach to challenges in his state, laid out a plan to fix the problem – even as protesters called for his resignation outside the Michigan Legislature in Lansing.

The crisis, however, reverberates beyond Michigan and heralds more than just trouble for Snyder’s political career, some say.

Indeed, the situation in Flint – coupled with Michigan’s other financial woes – points to deeper issues tied to the way governments run states, particularly in times of financial distress, political experts say. And in Michigan – where rocky relations between a GOP-controlled state and often Democratic local agencies compound tensions between the governor’s office and the more hard-line Legislature – such issues are thrown into sharp relief, they add.

The water crisis underscores the limitations of an entrepreneurial method of governance in a way that could resonate beyond Michigan, says Thad Kousser, a political science professor at the University of California in San Diego.

“What this crisis points out is one of the limits in running a government as a business,” says Professor Kousser, whose research focuses on state politics. He notes that since the Great Recession, other states have attempted to apply business principles in an effort to avoid tax hikes: In 2009, then-California Gov. Arnold Schwarzenegger put forward a contested proposal to sell off state landmarks to erase a $24 million budget deficit.

Arizona lawmakers, too, sold buildings in its state capitol – along with a slew of other state properties – in a desperate push to balance its 2010 budget.

In Flint’s case, Kousser says, the problem stemmed from what appears to have been a trade-off between cost-cutting measures and public health.

“The private marketplace works because of competition, but governments often have monopoly,” he notes. “When Volkswagen screws up, you can buy a Ford. But when lead starts coming out of your tap, you can’t just turn on another tap.

“I don’t think it proves a general point that governments can’t be run like a business,” Kousser adds. “But it shows some of the things you risk when you do.”

The business of governance

Flint is a once-thriving Michigan city whose growth paralleled that of the auto industry. After General Motors closed or relocated its plants in the 1980s and ’90s, both the city’s population and economic prospects declined. Today, roughly 99,000 people call Flint home, with 40 percent of the population living below the poverty level.

In recent years, the city’s debt spiraled, leading the state to declare a financial emergency. Since 2011, Snyder has appointed five emergency managers to grapple with the city’s finances.

The decision to switch the water to the Flint River came during the tenure of emergency manager Darnell Earley. After months of Flint residents being told the water was safe by the Michigan Department of Environmental Quality, a Virginia Tech professor’s research uncovered elevated levels of lead in the water last fall. On Saturday, a Flint Journal Freedom of Information Act request uncovered a possible link between Flint’s water and an outbreak of Legionnaire’s disease that killed 10 people.

Federal and state investigations have been launched into the water crisis and donations of bottled water are pouring into the Great Lakes city from everyone from Cher to churches and mosques to ex-convicts. President Obama signed a federal emergency declaration last week, freeing $5 million to help the city, and announced this week that he is appointing a water czar for Flint.

“The Flint water crisis happened because of a series of very bad decisions taken because of a toxic political climate,” writes Jenna Bednar, a research professor at the Center for Political Studies at the University of Michigan’s Institute for Social Research in Ann Arbor, in an e-mail to the Monitor. “Snyder’s business-like approach [to governance] values the bottom line. The bottom line here is that responsibility for creating that toxic decision-making environment belongs with the Legislature as well as with the governor.”

Snyder, a Republican, is a former tax accountant and venture capitalist who in 2010 campaigned on the promise that he would use business principles to pull Michigan out of financial difficulty. The approach has seen some successes, most notably the 2014 deal that helped haul Detroit out of the largest municipal bankruptcy filing in US history.

But Snyder’s strategy also has run into potholes, Michigan political experts say. In trying to rebuild the state’s infamous roads, for instance, Snyder pushed to raise funds for repairs in a bid that pitted him against more ideologically conservative legislators, who wanted to address the issue without raising taxes. The resulting ballot proposal in 2012 was a convoluted piece of legislation that lost “by the largest margin in recent history,” Dr. Bednar wrote.

“Good businesses plan beyond the next quarterly report,” she writes. “Snyder tried with mixed success to create support for long-range investments for Michigan.”

Reassessing state-local relations

Both the governor and the Legislature now appear united in a desire to help tackle Flint’s water crisis.

Indeed, the Republican head of the House Appropriations Committee told the Detroit Free Press that he expects full support for Snyder’s request for $28.5 million to cover immediate needs in Flint, including the cost of filters, bottled water, and additional troops from the Michigan National Guard.

Some political observers urge a closer examination of the top-down approach to governance that the state imposes on municipalities – especially those in financial trouble.

“The complexities here have more to do with the general state-local relationship,” says Matt Grossmann, director of the Institute for Public Policy and Social Research and an associate professor of political science at Michigan State University in Lansing. “The decisions were made at times when Flint was being managed by [state-appointed] emergency managers. A review of that policy and its implementation here is warranted.”

Under Michigan law, the state can appoint an emergency financial manager to a municipality in financial crisis. The manager, tasked to take charge of the city’s finances, is accountable to the governor and the legislature.  

But following the Flint crisis, advocates and residents have called the policy into question, noting that the dubious decision to switch the water supply from Detroit to the Flint River was done under emergency manager Darnell Earley.

To some, the decision reveals a lack of understanding, on the state’s part, of the value of engaging communities during times of crisis – a mistake that they see the state already repeating in Detroit, where Mr. Earley is now in charge of reforms to the beleaguered Detroit Public School system.

On Wednesday, 88 Detroit schools were closed as a result of a teacher sickout. Organizers say the sickouts, which have been ongoing this month, are designed to draw attention to the dire state of some buildings – problems include buckling floors, mold, mildew, and a lack of heat in some classrooms.

“We need a better approach to state and local relations in general,” says Eric Scorsone, associate professor and founding director of the Michigan State University (MSU) Extension Center for State and Local Government Policy. “Communities are where the hard work happens, where quality of life is created or destroyed. The state needs to take a more proactive approach” in reaching out to municipalities.

“We need to have a serious assessment of our governmental operations,” he adds.

Some states, such as New Jersey and Pennsylvania, have developed policies that could serve as models for state-local cooperation, Dr. Scorsone notes, citing an August 2015 MSU report on state takeovers during times of financial crisis. Those vary, but all stress working in a greater spirit of collaboration.

In some ways, “Michigan's economic and demographic difficulties make public policy choices more difficult and make errors more calamitous,” writes Dr. Grossmann in a follow-up e-mail to the Monitor.

But making a point to understand and respond to the specific needs of residents in ways that foster cooperation is a principle that all states can apply, Scorsone notes.

“We need to remember that government is not a business. It’s supposed to be there to protect health, safety, and welfare of the people,” he says. “This may be a good wake-up call.”