Detroit Emergency Financial Manager, State Appointee, Could Be On The Way

UPDATE: 4:20pm — WXYZ reports that Andy Dillon, head of the State Treasurer’s Office, will begin a review of the city’s financial book beginning next week. That review is expected to take at least a month to complete.

Yesterday, HuffPost Detroit reported that Detroit City Council scheduled a vote on a budget amendment needed to repay almost $30 million to the city’s pension plan — money that had never been paid last year, due to an apparent accounting error. According to Dillon, “that mistake is one thing that changed the financial position of the city, and led to the state review,” reported WXYZ.

Mayor Dave Bing released a statement regarding the possibility of an emergency financial manager appointment this month.

“My Administration has had discussions with the State regarding an Emergency Financial Manager previously. Until the State makes a final determination, I will continue to implement my Restructuring Plan on behalf of the citizens of Detroit.”

The state of Michigan’s treasurer says that the appointment of an emergency financial manager to the city of Detroit is inevitable, according to a story in the Detroit Free Press.

Michigan Treasurer Andy Dillon, who chairs the state-appointed financial review team that declared Detroit in a state of financial emergency last March, reportedly met with several elected officials in Detroit on Wednesday. Several sources told the Free Press that the treasurer is considering who to name to the position of emergency financial manager (EFM) and how the political powers of Detroit Mayor Dave Bing and City Council will be affected.

The city is projected to face a budget shortfall of nearly $47 million in obligations to creditors and employees by June 30. The Free Press said the state of Michigan would cooperate by helping the city pay its debts and make payday while an EFM made significant financial decisions.

In November, Michigan voters struck down PA 4, which allowed Gov. Rick Snyder to appoint emergency managers with broad powers over city governance, including the ability to fire elected officials and dissolve union contracts. But the governor can still appoint an emergency financial manager to assume control over Detroit’s budget under an earlier law, Public Act 72.

According to the newspaper’s sources, there’s only one option for city leaders before an EFM assumes control: approving a list of reforms that Mayor Bing’s administration will apparently negotiate with Detroit City Council before its next scheduled meeting on Dec. 11.

But City Council and Mayor Bing have butted heads numerous times in recent months, with the 12-member elected body rejecting the state’s offer to lease and manage the city’s Belle Isle island park. And the council rejected a $300,000 contract with law firm Miller Canfield, which was a required proponent of the city’s milestone agreement with the state of Michigan.

Detroit has, until this point, avoided the appointment of an emergency financial manager by entering into a consent agreement with the state of Michigan. Detroit’s corporation counsel, Krystal Crittendon, filed a lawsuit in June in which she argued that the consent agreement was invalid, causing Bing to attempt to remove her from her position.

“The officials said Dillon told them he believed Detroit was out of time and that inaction and disputes between Bing and the council left him no choice but to prepare for even deeper state intervention,” the Free Press report added.

Snyder and state legislators are discussing several different versions of a new emergency manager law that he says would be less intrusive than the proposal voted down by Michigan residents, according to Michigan Radio. The new legislation could be introduced in the next week.

Treasurer Andy Dillon and Gov. Rick Snyder did not immediately respond to The Huffington Post’s request for comment. 

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