Detroit’s mayoral candidates were quick to express their opinions on Detroit’s impending emergency financial manager (EFM) after an announcement last week gave Gov. Rick Snyder the green light to appoint an EFM to Detroit.
Mayoral contenders, former DMC CEO Mike Duggan, Wayne Country Sherriff Benny Napoleon, and Lisa Howze, found various ways to sound off on the topic.
While Duggan and Howze are still fighting the idea of an EFM for Detroit, Napoleon has said it’s time for Detroit to accept the fact that an EFM is on the way.
Napoleon posted on his campaign’s Facebook page:
“The winds have changed. Let's partner with the Emergency Financial Manager (likely to be appointed) to swiftly address the city's finances, improve city services and then focus on a strong Detroit future with local elected leadership. As a partner in repairing city government and setting our future, we have a voice.”
So far, Napoleon is the only candidate who has retired his fighting words about the looming EFM.
Howze said in a recorded statement last week:
“I beg to differ with this public perception that only option for the City of Detroit is an emergency financial manager. What we need is strong senior and middle level management in areas of human resources, finance, and legal. Where the State can partner with us is in passing legislation that will allow Detroit to better collect its income tax revenue through withholding.”
Duggan took the fight to an op-ed, published in the Detroit Free Press.
In the piece he blasts Detroit Public Schools emergency management, calling it an example of failure.
“Turnarounds demand exceptional management talent. Without that talent, the greatest strategies in the world are just documents on a shelf."
He then he dissed the future EFM team, whoever that may be:
“What successful executive is going to make a career change to join a city of Detroit emergency manager with an expected tenure of 6-18 months?
While Duggan, Howze and Napoleon all have their opinions, they hold little sway with the state. Even current Mayor Dave Bing has declared any decision on a Detroit EFM on out of his control.
Does that mean that we should all keep quiet and leave the financial fate of the city in the Governor’s hands?
Not necessarily. But the real battle against an EFM was, in a way, already fought. Last year when voters rejected the emergency manager law, Public Act 4, it was thought to have been won. But a month later, the state passed a new, very similar law, PA436.
The silver lining to PA436 is that the governor can’t just snap his fingers and appoint an EM. The city would have a chance to opt out—they could offer up a restructuring plan of their own, ask for another consent agreement, file for chapter 9 bankrupty, or get a mediator involved. Another notable difference is that PA436 is referendum-proof, meaning it's protected from ever going to public vote.
Here’s the catch: PA436 doesn’t kick in until late March. Currently, the state is operating under Public Act 72, the earliest EFM legislation passed in 1990. If Snyder acts before March 27, the city would be grandfathered into PA72, where the city cannot, in a sense, pick their poison.
So, should Detroit opponents of EFMs accept their fate, or keep on fighting what seems like the inevitable?
One day after Gov. Rick Snyder appointed a 6-member team to conduct a financial review of Detroit’s finances, Mayor Dave Bing rolled out a “revenue enhancement” plan estimated to bring the city $50 million in revenue.
But at this point, after years on financial insolvency, many are wondering if the city’s new collection initiative is “too little to late”.
City and State officials have warned that a wrong move at this crucial time in Detroit’s history could land the city in bankruptcy court.
But here’s the twist: Under state law, the city must first be appointed an Emergency Financial Manager (EFM) before being eligible to file for bankruptcy. Snyder’s review team’s findings could result in him appointing an EFM to Detroit, someone who would take away the Bing Administration and the City Council’s power to make financial decisions.
Just a month ago, city and state officials were squabbling over the release of $30 million in escrowed state funds. Now that the city has reached the milestones of an agreement that was contingent on the $30 million drawdown, the city is not in much better shape.
During the drawn out “milestones” tug of war between the mayor’s office and city council members, the mayor’s talking points made it sound like the $30 would stave off layoffs.
Turns out, layoffs are just one of the measures the city has to take in order to move not toward financial solvency but just to keep afloat.
One thing that’s different now is that City residents and business owners face tougher tax collection efforts now that the city has hired private collection agencies to go after delinquent accounts. No one is safe, not even the mighty Illitches who owe more than 1.5 million in taxes.
The city estimates that it could gain nearly $20 million in tax collection initiatives annually if stricter collection is enforced.
That begs the question: why were these collection measures not taken sooner?
The answer is a complex one that boils down to the fact that the city, until recent contracts with private firms, did not have the capacity to go after its debtors, Bing says.
As the city keeps skimming its payroll, there are less people doing work.
“Because of the loss of so many people—we had almost 14, 00 people when we came into office now we 9,700 people—we need some help on the personnel standpoint so we’re going to the outside and getting some outside firms to come in and help us. They are not going to be permanent.”
Meanwhile, the city plans to lay off 500 more workers in early 2013 mostly through attrition and retirement according to CFO Jack Martin.
Still, is this too little too late, Mr. Mayor?
“It’s too soon to say,” Bing said Wednesday. “We’re not throwing in the towel. Contrary to what a lot of people may believe there’s a lot of good things we have done. I think when we lay this plan out it’s going to surprise a lot of people. This is not a ‘get tough’ stance on anybody. It’s fairness and being correct.”
At this point Detroiters can only wait and see. Hopefully, people will get the surprise Bing looks forward to.
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