Mich. gov.: Progress made on Detroit finances deal

March 26, 2012 - 10:15 PM
Detroit Finances

Audience members and Detroit residents approach the group before the public comment period during the meeting for the review team for Detroit's finances on Monday, March 26, 2012 in Detroit. State officials say they hope to negotiate a consent decree with Detroit within 10 days. The raucous review team meeting concluded with no deal in place. (AP Photo/Detroit News, Elizabeth Conley) DETROIT FREE PRESS OUT; HUFFINGTON POST OUT

DETROIT (AP) — A deal aimed at rescuing Detroit before it goes broke appeared imminent Monday after city and state negotiators reported major progress in their often-contentious talks and a review panel appointed by Gov. Rick Snyder decided not to recommend that an emergency manager take over the reins of city government.

Snyder has 10 days to negotiate a compromise with city officials before deciding if an emergency manager is needed. Both he and the City Council predicted an agreement would be reached by the end of the week.

The compromise being worked out would put a project manager in charge of overseeing reforms but would leave city leaders with more authority than the emergency manager process would. The state and city also would basically split the appointments to a financial advisory board that could overrule city officials' decisions that stray from the changes they promise to make in the city's troubled finances. A chief financial officer would be jointly appointed by the mayor and governor.

"My role is not to run the city of Detroit. My goal is for the state to provide a supporting resource, be a partner," the Republican governor said. "Much of this agreement is pretty far along. We need to make some reviews. Both the City Council and mayor need to make some reviews."

Treasurer Andy Dillon said budget language and an agreement over what order the reforms should be completed remain to be written.

"I believe the document works, and it's very close," he said.

A financial review team concluded Monday afternoon that Detroit is in "severe financial stress" but stopped short of recommending that Snyder appoint an emergency manager. During the meeting, a packed crowd shouted angry chants against any deal that didn't leave Detroit in charge of its own fiscal matters. "No consent decree!" the crowd chanted. "No takeover!"

"The governor assured me today he doesn't want an emergency manager, and neither do I," Dillon told them, only to see his words greeted with the crowd's roar of "liar!"

Conrad Mallett, one of the state's first black Michigan Supreme Court justices, came under pointed criticism for cooperating with the white treasurer as the review board shaped its recommendation.

"You sit up there and you fix it for him, just like a good colored person," former Detroit Public Schools board member Marie Thornton told Mallett, now president of Sinai-Grace Hospital.

Mallett dismissed the complaints as a "family fight" within the city, which is 80 percent black. He added he's not mad at his critics but said they need to realize the review board's goal it to create a stable financial future for Michigan's largest city.

A final deal remains up in the air in part because Detroit Mayor Dave Bing is hospitalized after having surgery over the weekend on a perforated intestine, said Dennis Muchmore, Snyder's chief of staff.

Doctors said the mayor likely would remain hospitalized for five to seven days, but would be able to perform some duties of his office. Bing's chief of staff and deputy mayor in his absence, Kirk Lewis, is handling negotiations with the governor's office.

Detroit faces a $200 million budget deficit and could run out of cash by the end of May. The governor has declined to offer any short-term financial assistance until some agreement is reached to deal with the city's ongoing financial difficulties and its long-term liabilities for pensions, health care and bonds. Two ratings agencies this month downgraded Detroit's bond ratings.

"Everyone knows Detroit's finances are in very difficult shape," Snyder said.

An emergency appeal was filed Monday with the Michigan Supreme Court to keep the governor and financial review team from entering into an agreement with city officials. The court has not said yet if it will hear the appeal.

As the plan stands now, the nine-member financial advisory board would act as Detroit's board of directors, offering advice and guidance to the mayor, Muchmore said.

But that board would be empowered to step in and do far more — including deciding what the city budget would look like and other financial decisions — if the mayor and City Council fail to follow certain steps to keep Detroit afloat and fail to pay off the city's long-term debt.

"The financial advisory board doesn't do you much good if it doesn't have any power," Muchmore said. "It's all about accountability and efficiency."

If a deal is reached, it's likely to contain language that keeps it in place even if opponents of the state's emergency manager law are found to have submitted enough valid signatures to put an issue on the November ballot that could lead to the act being repealed. The act could be suspended in late April if state elections officials certify that the measure will be on the ballot.

If a deal falls through and Snyder decides to appoint an emergency manager, that person would have the authority to remove the mayor and City Council and redo collective bargaining agreements with Detroit's municipal unions.

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