In Detroit’s Financial Drama, Midnight Approaches

Last Updated: December 2. 2011 10:42 p.m.

State treasurer orders review of Detroit's finances
By Leonard N. Fleming
The Detroit News

Detroit— State Treasurer Andy Dillon ordered a preliminary review of Detroit's precarious finances today to help determine if the city requires more state intervention.

Dillon told The Detroit News Friday that he alerted Mayor Dave Bing earlier Friday of his decision. The move comes one day after the mayor, several City Council members and union brass came together and promised concessions to stave off the appointment of an emergency manger [sic].

"The press conference yesterday showed unity and that's one good sign…for the first time council, labor and the mayor seemed to be motivated," Dillon said. "If nothing else, it's our hope that they come to a deal and they stop this process because they've got a deal that gets the city's finances in order."

While pleased with the city's intent, Dillon said the Bing administration has been slow to solve its fiscal crisis.

"That's the one thing I would disagree with from yesterday," he said. "There's been nothing holding them back from implementing this a long time ago."

If the city is able to resolve its financial crisis adequately, Dillon would suspend the review, he said during a conference call this afternoon.

"It's a fixable issue for the city," Dillon said.

In a statement, Bing said that "while unfortunate," the decision to conduct the preliminary review was not unexpected.

"We believe we have the right plan to address the City's fiscal crisis and we will continue to work with City Council, our unions and other stakeholders to achieve the necessary cuts and concessions, including pension, healthcare and work rule reform," Bing said.

"I'm confident with yesterday's demonstration of solidarity and shared commitment that we will continue to make progress. We are committed to full cooperation with the Governor's fiscal team, who has had full access to the City's financial information and plan for months."

Dillon ordered a preliminary review, but a more extensive review can kick off the 30-day timeline that could trigger an emergency manager.

Meanwhile, more than 100 labor, civic and religious leaders gathered at the AFSCME headquarters on Lafayette in Detroit this afternoon for a call to action to repeal the emergency manager law. Michigan Forward is ramping up its effort to collect signatures against the law that it alleges undercuts voting rights.

Herb Sanders, of Michigan AFSCME Council 25, asked the crowd, "What does democracy look like?" They answered: "This is what democracy looks like."

"Our cities are being attacked by this administration by all ends," Southfield Mayor Brenda Lawrence said. "They cut our revenue sharing and they say find a way to make it work. All of our cities are holding on by a thread to balance our budgets and to get solvent so we can continue to provide services. This is about democracy and rights."

The Rev. Wendell Anthony, Detroit Branch NAACP President, said there's no way the fight against the emergency manager law is over.

"It goes against the fundamental essence of our democracy," Anthony said.

"For those of you who keep talking about the inevitability of a financial manager and that we cannot do anything about it, you must have lost your mind. That is nonsense. If that's the case, then Martin Luther King would never have had a dream. If that's the case, none of us would be where we are today."

Dillon said two major issues are driving the review: that the city is forecast to run out of money in April and that the total debt for the city stands at more than $10 billion.

Funded debt for the city, Dillon said, is about $2.4 billion, Dillon said. Unfunded health care liability and the shortfall in the pension costs are "a challenge," Dillon said of the debt.

Two people from his department will come down to city hall to "take a look at the books and come back and make a recommendation to me if they think a formal review is necessary."

Dillon said he can either accept or reject the recommendation. If he accepts it, then he will alert the governor that "we believe there's enough financial stress to put together a formal review."

The review team is made up by a designee of the treasury department, a designee from the budget director, one or two from the governor and then the Senate majority leader and the Speaker of the House.

"I actually think the city can navigate through this. I'm not nervous, but the longer we wait, the harder it gets," Dillon said.

lfleming@detnews.com

(313) 222-2072

[Thanks to reader-researcher RC.]