Urban Fiscal Crisis and Local Emergency Management: Tracking the Color Line in Michigan

The usage of emergency management by United States’ state-level governments to resolve troubled municipal finances increased dramatically over the past three decades. Layoffs, school closings, pension renegotiations, and sale of public assets are the product of such policies, and these policies unevenly affect black residents. Recent legal decisions argue this is an innocent byproduct of black concentration in fiscally distressed cities. Thus, targeted emergency intervention is colorblind in its application, and any race-bias is mere statistical discrimination among fiscally-challenged areas. We investigate this assertion, asking if racially inequitable outcomes signal differential impact on, or differential treatment of black people. We investigate Michigan, the site of the country’s most intensive emergency management deployments. Using all politically incorporated units in Michigan, 2007-2013, we develop a counterfactual test using the state’s own fiscal distress scale and adjusting for percentage black and median household income of each unit. We find a net effect of the percentage of black residents on the likelihood of emergency management after adjusting for fiscal distress. If correctly specified, our model gives evidence that racial bias was a factor in the application of emergency management – that units in Michigan with similar fiscal distress levels were more likely to get emergency management if they had higher black populations, all else equal. We cannot identify the specific micro-mechanisms at play, meaning we cannot conclude if any actors in the process had race-biased intentions, and we discuss the meaning of our findings in light of this.