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Andy Dillion Requests Full Review Of Detroit Finances (UPDATED)

Andy Dillon

The Huffington Post   First Posted: 12/21/11 12:19 PM ET Updated: 12/21/11 12:42 PM ET

State Treasurer Andy Dillon announced Wednesday he would recommend Gov. Rick Snyder begin a full financial review of the City of Detroit.

Dillon's team determined Detroit was under "probable financial stress" after a quick 15-day preliminary review, the first step in the process of appointing an emergency manager for the cash-strapped city. Preliminary reviews can last up to 30 days.

UPDATE: 12:39 p.m. -- Detroit Mayor Dave Bing released a statement early Wednesday afternoon in response to the announcement:

As I've said many times before, this action was not unexpected. There is nothing in the findings released today that we or the state were not previously aware of and that we have been addressing. We will continue to fully cooperate with the review process. However, I firmly believe that the remedy to the city’s financial crisis is my plan that seeks savings of $102 million for this fiscal year and $258 million in fiscal year 2012-13. Key components of my plan include structural reforms in health care and pensions, work rule changes and wage reductions. We will continue to negotiate with union leadership with a goal of forging an agreement soon.

Bing announced on Nov. 16 that the city would face a $45 million cash shortfall early next year. He has since called for union concessions and layoffs, as well as for the state to pay $220 million owed to the city under a past revenue-sharing agreement, as well as assist in collecting city income taxes.

Bing has said he opposes a state takeover of Detroit, and he stood with City Council, labor and community leaders to announce that opposition on Dec. 1, the day Snyder and Dillon announced the preliminary review.

Snyder and Dillion have said appointing an emergency manager should be considered a last resort. They have also floated the idea of a consent agreement, which would grant the mayor some additional powers.

Under Public Act 4, an emergency manager has the power to break contracts, fire elected officials, and sell public assets in the name of righting a city or school district's finances. Pontiac's emergency manager announced Tuesday that he would sell some of the city's fire stations, cemeteries, landfills, water-pumping stations, community centers, and the public library and police station, the Free Press reported.

Emergency managers are currently in place in Pontiac, Benton Harbor, Ecorse, Flint and the Detroit Public Schools. But opposition has been growing, especially in response to the impending appointment of an emergency manager for Detroit.

A petition effort to freeze Public Act 4 and put it up for a referendum has gathered nearly enough signatures. Detroit's congressional Democrats have come out against the law, with Sens. Debbie Stabenow and Carl Levin chiding Snyder for engineering new legislation that would give any repeal effort the run-around. U.S. Rep. John Conyers has requested a federal review of the law's constitutionality.

But for now Public Act 4 stands, and Snyder is likely to approve Dillon's request for a full review of Detroit. The review team will have up to 90 days to determine the city's financial situation, though a decision could be made sooner.

"As we have noted on numerous occasions, the longer it takes to address Detroit's financial problems, the more painful the potential solutions become," Dillon said in a statement.

The state has pushed Bing and City Council to work quickly; in an interview with the Michigan Chronicle published last week, Snyder said, "The mayor and the city council have been going back and forth for quite a while. The clock is ticking."

Snyder has also demanded a rushed review of Public Act 4 before the Michigan Supreme Court, in an attempt to fast-track a decision on a lawsuit challenging the law.

For more on emergency managers in Detroit and elsewhere in Michigan, see HuffPost Detroit's Emergency Manager page.

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