“Municipal Takeovers”: Failing to Address Corruption While Threatening Democratic Self-Government 

The town of Mason is a small, majority-Black community in the State of Tennessee. For two decades, Mason’s municipal government has been afflicted with serious corruption and financial mismanagement, leading to the resignation a few years ago of almost all of Mason’s elected leadership following allegations of fraud and embezzlement. In the wake of these persistent problems, this past February the Tennessee State Comptroller, Jason Mumpower, sent a dramatic request to every property owner in Mason: vote to dissolve your town (in which case Mason would be absorbed into majority-White Tipton County, thus ending Mason’s 153 years of independent governance), or else the state government will exercise its legal authority to step in and take financial control of Mason’s town government—which would likely lead to drastic layoffs and cuts to municipal benefits. (Mumpower’s ultimatum may well have been influenced not only by Mason’s history of municipal corruption, but also by the fact that Ford Motors is set to open up a massive manufacturing plant nearby, which will bring in significant tax revenue that Mumpower claimed Mason’s town government can’t handle responsibly.)

The situation in Mason may seem extraordinary, but it is far from unique. Roughly twenty U.S. states have laws that permit the state government to take over municipal governments, although the specifics of the laws differ. (Municipal takeovers are often preceded, as in Mason, by presenting the municipality with the option to dissolve and be absorbed into the surrounding county.) Though municipal takeovers come in various forms, they generally entail the appointment of an “intervenor,” such as a state official, emergency manager, or financial control board. In some states, the intervenor’s powers are limited to financial oversight and technical assistance, but in other states (including Tennessee), the intervenor can take steps as radical as entirely dissolving a locality.

Municipal takeovers are, unsurprisingly, controversial. While pursuing a takeover is an extreme step, one can understand why some people might find it warranted, especially when corruption is so deeply embedded in a municipality that it seems inconceivable that the local government can clean itself up. But this view is misguided, at least in the U.S. context. (Municipal dissolution has been deployed and endorsed by some anticorruption advocates in other countries, such as Italy. While some of my arguments may apply in other contexts, this post focuses on the United States.) First, the costs of municipal takeovers are substantial and are often underestimated. Second, the purported benefits of municipal takeovers—at least with respect to addressing the underlying corruption and misgovernance problems in a given community—rarely materialize.

The principal cost of municipal takeovers concerns the adverse effects on democracy and local self-government. Municipal takeovers replace a community’s locally-elected leadership with state-appointed officials who often have few ties to the community and little awareness of local needs. This is only exacerbated in cases like Mason where the demographics of a municipality are vastly different from the demographics of the state at large. Indeed, most cities and towns that have been subject to municipal takeovers in the U.S. are majority non-White. Municipal takeovers therefore not only deprive voters of a democratic voice, but they also foster deep resentment in these communities. After all, when a state takes control of a city or town due to the actions of a few corrupt officials, the state punishes citizens in these communities for a problem that is not even their fault. 

Defenders of municipal takeovers have a ready response to this objection: when municipal corruption is endemic and persistent, it is the citizens of these communities who suffer; accordingly, outside intervention is essential. The rhetoric of “local democracy” and “self-determination” rings hollow, the argument goes, in light of the fact that local elites have captured the municipal government and run it to enrich themselves at the expense of the residents. In principle, that seems like it could be a plausible justification for a (hopefully temporary) municipal takeover. In practice, however, state intervenors typically do not pursue the kinds of reforms that achieve meaningful improvements in the integrity and responsiveness of local governments.

Consider just a few examples: In 2016, New Jersey took control of Atlantic City after a period of financial ruin and decades of corrupt leadership. The same happened to Camden, New Jersey, in the early 2000s, and Detroit, Michigan, in 2013. Flash forward to today: Atlantic City’s last mayor resigned after pleading guilty to wire fraud, while the city still has a 38% poverty rate. Camden has continued to struggle with corruption in the decades since the takeover, which has failed to meaningfully improve financial conditions. And in Detroit, where “failed local elected leadership” and public corruption were major justifications for the municipal takeover, a recent and sprawling FBI investigation has already sent a sitting city councilmember to prison on public corruption and bribery charges, and this is likely just the start. In short, the track record of state takeovers in fixing municipal corruption problems is abysmal. To be sure, during the temporary period when the state has taken control of the municipality, local corruption typically decreases, simply by virtue of the fact that the local leaders have been deprived of much or all of their power. But what happens when the state inevitably steps away? The evidence suggests that the corruption returns—and the financial and other associated problems return with it.

One of the main reasons that municipal takeovers are so often ineffective in combating corruption is that state-appointed intervenors tend to focus solely on a municipality’s budgetary woes, rather than underlying weaknesses in integrity and accountability safeguards. Even when corruption is a key motivating factor in pursuing a municipal takeover—and a key element of the public justification for such a drastic move—intervenors typically focus monomaniacally on balancing budgets (frequently pushing sweeping austerity measures that result in painful cuts to municipal services in struggling communities) rather than implementing more structural reforms that could actually nip corruption in the bud. A balanced budget may be desirable (though one can question the wisdom of the drastic austerity measures typically favored by state intervenors), but a balanced budget does nothing to eliminate an embedded culture of corruption. In essence, state intervenors are attempting to use municipal takeovers to clean up the messes made by corrupt officials without addressing the core causes of corruption itself.

That said, this diagnosis implies that, despite the genuine costs of municipal takeovers, such takeovers might be justified, at least in some circumstances—so long as state governments take a different approach. If state leaders are serious about using municipal takeovers to address problems of local corruption, they must do more than swoop in, supplant locally elected leadership with unelected authorities, and then hope that the corruption problem goes away by the time they’re gone. If a state actually seeks to assure that a town or city can one day return to effective and clean governance on its own, it must deal with the structural factors that cause those problems. For example, one commentator has suggested that intervenors should “engage in restructuring of municipal governance in order to avoid the entrenched and fragmented institutions that are often associated with local fiscal distress.” While state-driven municipal restructuring may appear more invasive than balancing a budget, it could be more democratically desirable because it would allow for a community to retain its local leadership and set up future elected officials for success. Other less intrusive but still potentially effective reforms that state intervenors could pursue include setting up local ethics offices, anticorruption committees, and independent city auditors. (It’s also worth noting that if state governments are genuinely concerned about local corruption, there’s a lot more they could do to address some of the underlying factors—like poverty, income inequality, and structural racism—that likely contribute to systemic corruption in the kinds of communities that are disproportionately targeted for municipal takeovers.) 

And what of Mason, Tennessee? The town refused to dissolve, and the state took financial control last March. But the move provoked national outrage, and, after comprehensive financial planning by newly-elected town officials, Mason and the state reached an agreement under which state control would only last in a limited capacity until the end of the summer. This is encouraging: in a town like Mason, where a new local government has proven that it has been working zealously and honestly to make progress in correcting the course, it may be best for the state to simply leave them be.

 

1 thought on ““Municipal Takeovers”: Failing to Address Corruption While Threatening Democratic Self-Government 

  1. Those who really need to read this are those who the government of the U.K. will be sending to the BVI to run it now that home rule has been suspended thanks to widespread corruption and criminality among its locally elected leaders.
    Your follow up to this very fine post might look at how similar takeovers by the British and perhaps others have fared. I can only think of one, that where the British ruled Turks and Caicos directly for a period in the wake of a corruption scandal. But even if that is the only one, it begs for an analysis similar to the one you have done.

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