Panel: Detroit in 'severe financial emergency'

March 21, 2012 - 8:25 PM
Emergency Managers Michigan

Michael Antoine McMahon, 34, of Detroit agrees with a emergency financial manager, while speaking during public comments as The City of Detroit Financial Review Team meet Wednesday Mar. 21, 2012. As the future of Michigan’s emergency manager law winds through various courtrooms, the review team _ discussing a consent agreement being negotiating between the state and Detroit _ acknowledged Wednesday that a “severe financial emergency” exists in the city. (AP Photo/Detroit Free Press, Mandi Wright)

DETROIT (AP) — A review team appointed by Gov. Rick Snyder to examine Detroit's troubled finances determined Wednesday that a "severe financial emergency" exists in the city, a finding that could lead to the appointment of an emergency manager should state and city leaders fail to agree on an alternative solution in time.

Before the unanimous vote clarifying the depths of Detroit's fiscal problems, review team member and former Michigan Supreme Court Justice Conrad Mallett Jr. said the city's "old way of doing things has got to stop."

The panel's vote came one day after an Ingham County judge sidelined a state-appointed emergency manager for the city of Flint, putting the mayor and City Council back in charge because of open meetings violations. Michigan officials criticized the Flint ruling Wednesday and pledged to appeal.

"Personally, I think it was irresponsible," state Treasurer Andy Dillon said. "We were five days without anyone in charge of that city. There was no mayor in charge. There was no manager. The state wasn't even present in this courtroom when the order was issued."

Opponents of the law that gives Snyder the right to appoint a manager to take some powers away from struggling cities and school districts have been looking to local court victories like the one in Flint as a way of limiting the impact of the law while elections officials weigh whether to allow a statewide vote on repealing it.

Last month, a separate ruling temporarily removed the emergency manager for the Highland Park school district from office. Snyder was able to reappoint the emergency manager after the review team met in public and reissued its recommendations. State officials filed an appeal in that case Wednesday.

Time is running out in Detroit, the epicenter of the debate over whether the state should have the right to remove powers from local officials. The city, facing a budget deficit of about $200 million, is expected to run out of cash by the end of May without help.

Snyder proposed a consent agreement that would have a nine-member financial advisory board "oversee and supervise" the city's financial and operational restructuring. City officials swiftly rejected that offer, claiming it was essentially no different than an emergency manager. Dillon said the state received a counter-offer on Wednesday but declined to provide details.

Challenges to the emergency manager law create delays that do nothing to get rid of financial emergencies in the affected cities and schools, Snyder spokeswoman Geralyn Lasher said.

Andrew Paterson, a lawyer who successfully sued on behalf of a union activist and school board member in the Highland Park schools case, said Wednesday he thinks the Open Meetings Act could provide grounds for others to sue in other locations, but the cases may not be as clear cut.

"A lot of it has to do with timing," Paterson said. "It's a tough question to answer broadly."

It could be more complicated to file similar Open Meetings Act lawsuits in other places with emergency managers — the cities of Benton Harbor, Ecorse and Pontiac, along with the Detroit public school system. All are under state control with processes that started under former Democratic Gov. Jennifer Granholm. The state law that allowed appointing those emergency managers was replaced last year with Snyder's newer version.

In some of the locations, such as Pontiac and Benton Harbor, the emergency manager's work may be close to done and elected officials could resume power relatively soon no matter what happens with legal challenges.

Those challenges could be moot, though, if state election officials decide next month that a petition drive has produced enough valid signatures to force a statewide vote on the emergency manager law. If the board makes that ruling, the law would be suspended until after the election.

___

Associated Press Writers Kathy Barks Hoffman and Martin contributed from Lansing.

___

Follow Kathy Barks Hoffman on Twitter: http://twitter.com/kathybhoffman .