DETROIT—After nearly three months of examining Detroit’s finances, a six-member state review team declared Tuesday that Michigan’s largest city is in a state of financial emergency.
“Certainly I am not surprised by the findings of the State’s financial review team” Bing said Tuesday in a statement. “My Administration has been saying for the past four years that the City is under financial stress.”
Now that the review has been completed, the findings leave whether or not to appoint an emergency manager to Detroit up to Governor Rick Snyder. Snyder has said he would act quickly once he got the results. Detroit could have an emergency manager by early March.
“If the Governor decides to appoint an Emergency Financial Manager, he or she, like my Administration, is going to need resources -- particularly in the form of cash and additional staff,” Bing said.
Under the new emergency manager law, Public Act 436, passed in December, the state is responsible for paying some of the costs of hiring an emergency manager and state-appointed staff. PA436 is similar to its predecessor, Public Act 4, which was voted down by a ballot initiative in November. Namely, allows the powerful emergency manager to break collective bargaining contracts.
Bing said he plans to keep working to address problems in the city.
“As I have said before, my Administration will stay focused on the initiatives that most directly impact the citizens of Detroit: public safety, public lighting, transportation, recreation and neighborhood blight removal,” Bing said.
Detroit faces a $327 million budget deficit in the current fiscal year, ongoing cash flow problems and a long term projected budget debt of more than $12 billion.
"The cash condition has been a strain on the city," said state Treasurer Andy Dillon, a member of the review team. "The city has been running deficits since 2005, masking over those with long-term borrowing."
All six members of the review team members agreed that their findings showed a case of financial emergency.
If Snyder decides to appoint an emergency manager, it still wouldn’t be an immediate appointment. A lot depends on timing.
The new emergency manager law taking effect in March gives local governments the choice between an emergency manager, a mediator, filing for bankruptcy or to offer their own financial restructuring plan to the state.
Am emergency manager would be responsible for all of the city’s finances. Once a manager is in place, only the EM can decide whether or not to file for bankruptcy.
Detroit would be largest city in Michigan to go under the supervision of a state receiver, but not the first. The cities of Flint, Pontiac, Benton Harbor, Ecorse, and Allen Park are in state receivership.