Review Team: Detroit is in Financial Emergency

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Each of the six review team members agreed on the financial emergency determination, Dillon said.

If Snyder moves ahead and appoints an emergency manager, Detroit would be the sixth and largest city in Michigan to have one. The cities of Benton Harbor, Ecorse, Pontiac, Flint and Allen Park are currently under state oversight. School districts in Detroit, Highland Park and Muskegon Heights also have managers.

A new state law taking effect in late March gives local governments the chance to choose their own remedy when a review team finds a financial emergency exists. However, Detroit loses those options if an emergency manager is put in place before the new law goes into effect, said Terry Stanton, Treasury spokesman.

City Council President Pro Tem Gary Brown said the pace of fiscal change in Detroit has been too slow.

“The political will has often not been there to make the necessary and bold fiscal reforms,” Brown said in a written statement. The statement went on to say, “Without a doubt, we need the support and accountability that a State of Michigan partnership offers. We cannot address our legacy obligations alone. And, as Detroit goes, so goes Michigan.”

Now that the depth of Detroit’s woes is clearer, the most efficient path to recovery needs to be taken and that falls to Snyder, Dillon said.

“A lot of the ingredients for the turnaround of the city are in place,” Dillon said. “Now we just need to execute. I do believe strongly that Detroit is fixable and can see brighter days ahead.”

The six-member review team began looking closely at Detroit’s books in mid-December. Another team had done the same about 12 months earlier, but stopped short of declaring a financial emergency. That team’s findings eventually led to a consent agreement in April between Snyder and Bing.

Bing’s administration has struggled in meeting some of the consent agreement requirements, partly due to conflicts with the City Council and a challenge to the deal by then-Detroit corporation counsel Krystal Crittendon. The City Council voted last month to “unappoint” Crittendon from that position.

Bernstein said that at this point, it would be difficult for Snyder not to appoint a fiscal overseer to Detroit.

The report confirms “part of what we’ve already seen, in that the deficits have been running for the better part of a decade,” Bernstein told The Associated Press.

He also said the city’s underfunding of its pension liabilities is huge.

“I don’t know if the word ‘shocking’ is the right word,” Bernstein said. “It’s just the magnitude. That’s going to be a major hurdle. How you fix that is going to be a major, major undertaking.”

(Photo: AP)

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