For cities in crisis, a wonk in wingtips

Fred Headen has been in the news lately, for reasons that do not necessarily burnish Michigan’s image.

As director of the Department of Treasury’s Bureau of Local Government Services, Headen has played a regular role in reviewing the finances of Michigan’s most troubled cities. He’s served on local finance review teams and helped oversee how struggling cities recover, under either an emergency manager or an agreement on restructuring its finances.

These local governments, Headen said, face “the increasing complexity of laws” which add new layers of regulations and require new ways of meeting requirements. Those complications make his job all the more difficult.

Add to that the economic problems the state has suffered in the last decade, which were amplified by the collapse in the housing market (drying up property tax revenues for local units of government) and the situation has become positively dire for cities.

The 58-year-old Muskegon Township native worked early in his career for the nonpartisan Citizens Research Council. The independent research organization is a Michigan policy wonk’s playpen, known for its analyses on a variety of state and local fiscal, educational, governmental and constitutional issues.

Headen spent 16 years at the CRC, starting shortly after the Headlee tax limitation amendment was adopted to the Michigan Constitution. That amendment created a major change in how Michigan government worked, especially in relation to local governments. It was experience that served him well after he joined the state in the mid-1990s; except for a brief period as director of the state’s Tax Commission, Headen has spent his entire time with the state in Treasury’s local services.

“I loved my job,” Headen said.  “I could roll up my sleeves and actually advocate for public policy, instead of just write about it.”

In his career, Headen has served on 16 local review teams, five under Gov. John Engler, five under Gov. Jennifer Granholm and six under Gov. Rick Snyder.

Emergency managers can be named for both local governments and school districts.  Right now, EMs are overseeing operations in four cities: Benton Harbor, Ecorse, Flint and Pontiac. Their presence, while arguably fiscally necessary, is politically explosive, with councils in several of those cities trying to retake control of their operations. Not to mention, there’s the upcoming state referendum on revisions to the law enacted in 2011.

Other cities have gone through reviews. Allen Park is now undergoing a financial review that could lead to either a consent agreement on operations or an emergency manager. Inkster is now operating under a consent agreement to get its finances under control.

Most notable, however, is the situation in Detroit. After weeks of negotiation and rhetoric, the city council narrowly agreed to a consent agreement last spring (though that action had to survive a court challenge). It was during those discussions that Headen got some of his widest public exposure.

“It was the most challenging one I’ve been on,” he said, just because of the city’s size and the scope of its operations.

He was the one who would read out the findings of the Detroit financial review team on the overall state of the city’s finances. Watching him do so on statewide television, it appeared Headen was almost angry at the findings.

Headen says he does not remember being angry, but he acknowledges frustration as the state tried to avoid being in a situation where it would have to take control of the city and seemed, at that point, to be falling short.

His time overseeing local services for the state has lead him to provide two key bits of advice to local officials on avoiding financial problems.

The first is to adopt a realistic budget, something “not universally followed,” he noted.

The second is to monitor the budget on a regular basis and base that monitoring on “actual information.” Any changes that might have to be made to the budget will be easier to accomplish early in a fiscal year.

Headen also urges local officials to network since so many communities are confronting similar challenges.

Headen doesn’t just deal with local governance issues through his day job. He’s also president of his subdivision association – an duty that he admits can sometimes be tougher than dealing with mayors and city councils. After all, he noted, he doesn’t live next to the mayors and council members.

Known around Lansing for almost always wearing a dark suit to work, he was asked if a casual observer might find him mowing the lawn in a three-piece suit.

No, he said, but, “I do have my dress wingtips and my casual wingtips.”

Editor's note: This story was produced in a collaboration between Bridge Magazine and the Gongwer News Service.

John Lindstrom is publisher of Gongwer News Service Michigan, a subscription service that covers daily activities at the Capitol and in state government. Lindstrom is a graduate of Michigan State University and has worked in Michigan journalism for more than three decades.