The change can be productive for cities in crisis, says Mark Funkhouser, director of the Governing Institute, citing New York in the 1970s and Philadelphia and Washington, D.C., in the 1990s.
"Those are all cases where I think some sort of state intervention -- or in the case of D.C., federal intervention -- some sort of control board or oversight agency actually contributed to a turnaround for the city," he said.
In each case, local sovereignty was infringed -- but Funkhouser argues it was inescapable. "If you screw up your finances bad enough, you are going to lose your sovereignty for awhile," he says. "If you stop paying the rent, you're going be out on the street, and you're not going be able to say 'Well I want to live here, I want to live there, I want to do this, I want to buy a pizza.'"
But much like Funkhouser's delinquent renters, cities can fall victim to events beyond their control.
"To understand Detroit requires going back to the immediate post-World War II years," says Thomas Sugrue, professor of history and sociology at the University of Pennsylvania and author of The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit. That's when industry began to leave the city for lower-wage areas, and metro Detroit saw "rapid and almost galactic suburbanization."
Detroit lost hundreds of thousands of jobs, and discrimination determined who was able to follow them out. "The vast majority of the people who moved out of Detroit were white," Sugrue says. "So what you see left behind is a population that is poorer, more likely to be underemployed or working class, and more subject to the vagaries of the economy."
While the process was especially stark in Detroit, deindustrialization hammered most Northern and Midwestern manufacturing cities. On top of that, Michigan cities have lost income from local taxes and state revenue sharing during the recession -- making it nearly impossible to stanch the decline for now.
It all suggests that financial health depends upon more than the captain who is steering the ship.
Terry Stanton, the treasury spokesman, seems to agree. "You've got, in many cases, local units that have seen a loss of residents, a loss of tax base, a drop in property values. Those are the big drivers," he says. Despite these structural issues, Stanton argues that state intervention is justified.
"Local units are components of the state, and the state has a responsibility to ensure that they are financially stable," he says.
Legally speaking he may not be wrong, but that's precisely the problem. Plaintiffs point out that all but one of the Michigan cities under state control have poverty rates at least double the state average. If population loss and a depleted tax base can prompt emergency management, does that mean local government is a luxury poor people can't afford?
If so, it would be a big loss for places like Detroit, Flint, Pontiac, and Benton Harbor.