Proposal 1 may have been smashed but in Detroit, financial reforms sparked by the emergency manager legislation will be carried out as planned.
Just because voters struck down Proposal 1 doesn’t mean Detroit’s financial crisis was wiped out along with it. In fact, some argue that it’s quite the opposite; that without the State’s legislation to mandate emergency managers in cash-poor cities, these cities have no choice but to apply for bankruptcy, thus obliterating bond ratings and shaking the statewide economy.
With the defeat of Proposal 1 comes a new shower of questions.
Will state legislature draft up a new, similar, emergency manager law? Will any cities that already have emergency managers or advisory boards fight to keep them in place? Will elected officials, in order to avoid further financial chaos, carry on the work and advice that these state-appointed officials have given so far?
In Detroit, Mayor Dave Bing said he plans to carry out the suggested reforms that State and city appointed financial advisors laid out during the brief tenure of PA4. Bing wrote in a statement on Wednesday that the City's Consent Agreement with the State is still in place.
“I am determined to continue with vital reforms now underway in the City of Detroit, despite the defeat of Proposal 1 by Michigan voters in Tuesday’s election ... In the face of the City’s enormous fiscal deficit, I chose to negotiate a Financial Stability Agreement with the State of Michigan, rather than entertain the appointment of an Emergency Manager. The Financial Stability Agreement, approved by Detroit City Council last April, is still in place.”
That answers a couple of the immediate questions. Detroit is one of the municipalities whose leaders are electing to keep the financial advisors appointed through Public Act 4 and the reforms they have suggested.
There are 25 major reforms on the table as part of the consent agreement that Bing met with City Council to discuss last month. At the meeting, Bing got a positive response from the council.
“We are willing participants in the reforms," City Council President Charles Pugh said at the Oct. 22 meeting.
"You have our support," Councilman Andre Spivey told Bing regarding the reforms. "I don't see the Council being an impediment."
At the time, Councilwoman Saunteel Jenkins wanted to know if these reforms could be made Prop. 1 fell through on Nov. 6.
Bing said it didn't.
The Mayor has said that the reforms in question, which involve some compensation shifts for city employees, some reshaping of city departments and the creation of a lighting authority, are necessary for the City to be eligible for up to $80 million in bond sales from the State. Bing said Detroit could receive $10 million by Nov. 15, and another $20 million by Dec. 14 with more installments made as the City meets the reform requirements to boost bond ratings and sales.
Money is the motive for these 25 suggested reforms. Without strengthening bonding capacity Bing has warned over and over that the city will not be able to pay its employees at all, a much more grim outlook than pay cuts or a switch from salary to contract work.
Even opponents of the emergency manager law have to concede: Detroit is in dire financial straights. Just because the State can’t mandate new financial leadership is no excuse for elected officials to sit in denial while the city spins further into financial insolvency. Let’s hope our city leaders do the right thing and make the tough decisions needed.
Is it safe to assume that if we have the right leadership, we won't need Emergency Manager legislation like Public Act 4?
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