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Detroit Consent Agreement Reviewed By City Council

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FILE--In this Jan. 1, 2011 file photo, Michigan Gov. Rick Snyder, left, and Detroit Mayor Dave Bing, shake hands after inauguration ceremonies in Lansing, Mich. Said the mayor:
FILE--In this Jan. 1, 2011 file photo, Michigan Gov. Rick Snyder, left, and Detroit Mayor Dave Bing, shake hands after inauguration ceremonies in Lansing, Mich. Said the mayor: "This is our city. Detroit needs to be run by Detroiters.” (AP Photo/Paul Sancya, File)

Detroit City Council is set to review a proposal Tuesday from the state Treasurer's office that the governor says would help the city avoid an emergency manager.

Gov. Rick Snyder said Monday he favors a consent agreement for Detroit, which would grant more power to city officials -- most likely Mayor Dave Bing -- in exchange for meeting certain benchmarks set by the state.

"Let's have it so the city can keep running the city," Snyder said Monday morning.

A consent agreement would likely allow the executive branch even greater control over city finances. It would not allow the mayor to break contracts with city workers or vendors, but it would give him greater power at the bargaining table come June 30, when city unions' contracts expire. Bing has already extracted huge concessions from city unions in tentative agreements, but those deals have yet to be ratified by members.

An emergency manager, on the other hand, would have unilateral power to dismiss elected officials -- including the mayor and City Council -- and break contracts at will.

Bing has said he wants to avoid that possibility, and Snyder has echoed the mayor but refused to rule out an emergency manager entirely.

The state-appointed financial review team examining Detroit's finances should make a recommendation to the governor on what course to pursue before the end of the month. It's unclear what role the review team, recently rebuked by a circuit court judge for holding private meetings, played in developing the draft consent agreement.

It's possible that if City Council and Bing accept Snyder's proposed consent agreement, the governor would forgo an emergency manager. But critics say the draft proposal will not appeal to city officials.

The Detroit News reports the state's version of the consent agreement would exclude City Council members from the governing process, as well as privatize city services and bring even more budget cuts.

Some City Council members, including Pro Tem Gary Brown and Ken Cockrel, Jr., have said they support the idea of a consent agreement. However, Cockrel told WDIV Monday, "I think the approach from the Council will probably be thanks, but no thanks."

The agreement reportedly does not offer additional state funding for Detroit, something both Bing and some City Council members have insisted is necessary to keep the city functioning.

The state of Michigan owes Detroit as much as $220 million under a past revenue-sharing agreement, but Snyder has avoided any talk of the state assisting Detroit with cash. Bing estimated last week the city could use up to $150 million in loans from the state to keep afloat.

Detroit City Council meets at 10 a.m. Tuesday to discuss the draft consent agreement. This is a developing story. Check back here for updates.

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Some have said a consent agreement with the state would make Detroit Mayor Dave Bing a de facto emergency manager, but the agreement actually makes him emergency manager de jure.

Section 2.5 is titled "Grant of Emergency Manager Authority" and "grants the Mayor the powers prescribed for emergency managers in Section 19 [of Public Act 4]."

One exception: Bing will not have the power to break collective bargaining or other contracts. Neither does the Financial Review Board.

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The consent agreement proposed by Gov. Snyder calls for the creation of a nine-member "Financial Advisory Board," with members accountable to the governor, the Treasurer, the mayor, and one serving at the discretion of City Council.

The draft consent agreement also declares compensation for Financial Advisory Board members will be ,000 each, excluding the Treasurer.

The salary and expenses incurred by board members will be reimbursed by the state Treasury Department, but then billed to the City of Detroit:

The Treasury Department shall be responsible for the payment of all annual Compensation and Reimbursable Expenses incurred by Members, with all such payments to be reimburesed by the City no later than the earlier of (a) 45 days after the submission by the Treasury Department of an Invoice for such reimbursement to the City or (b) the close of the same State fiscal year in which such payments are made.

The salaries come to about the same price as an emergency manager: 0,00 total. Though appointed by the governor, emergency managers are paid by the municipal bodies they run, not the state.

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The Free Press has posted a pdf of the draft Detroit consent agreement. You can read the whole thing for yourself here.

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Pro Tem Gary Brown noted Tuesday the Council doesn't officially have a document to vote on, since the mayor's office has not submitted the consent agreement to the body.

There was also some confusion over whether City Council would have any input into the drafting of the consent agreement.

A spokeswoman for Mayor Dave Bing said the administration will not submit the draft version of the consent agreement to City Council to review or amend. She said because it was prepared by the state of Michigan, the mayor's office would wait until there is a full and final document before bringing it to Council.

"When we get the final document, will there have been any council input in that process or will we just get something that's been negotiated by Snyder's office and Bing's office?" asked Council President Charles Pugh.

Council Member Saunteel Jenkins recommended Council members negotiate or submit its own revisions to the consent agreement proposal.

"When we wait for other people to include us, we're often left out," she said.

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The state Treasury department announced Tuesday morning that Detroit's state-appointed financial review team would hold a public meeting at 2:30 in Room L-150, 1st Floor of Cadillac Place, 3044 W. Grand Blvd. in Detroit.

The team's last public meeting resulted in the surprise creation of a subcommittee that state officials said could continue to meet in private. The stated purpose of the subcommittee was to discuss the legal paramaters of a consent agreement between the state and Detroit.

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Gov. Rick Snyder spoke on the "Your Voice with Angelo Henderson” show on WCHB 1200 AM Tuesday morning, sharing his optimistic view of a consent agreement.

In his eyes, the financial advisory board created by the consent agreement would be a beneficial support system for the city. At the same time, he held up the threat of an emergency manager if officials cannot come together over a consent agreement before the March 28 deadline for the Detroit financial review team's report.

"If people don't want to participate [in the consent agreement], I need to make sure someone is looking out for the citizens of Detroit," Snyder said

The governor addressed the 0 million many in the city have insisted the state owes Detroit, saying he wasn't certain that there is a legal obligation for the state to pay it, and that either way it doesn't affect his plan for a consent agreement.

"I'm not sure there is legally a debt owed," he said. "This is something I want to work on together -- it can't be a situation of putting more money in a hole."

"We don't want to have a situation where more money comes in and we haven't improved the fundamentals," he added.

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It seems state officials carefully crafted their draft consent agreement keeping in mind ongoing challenges to Michigan's emergency manager law.

While the agreement includes a provision saying any challenge to its implementation could result in the appointment of an emergency manager and Chapter 9 bankruptcy for the city, it also takes into account the possibility that Public Act 4 could soon be overturned.

A petition drive seeking to freeze the law turned in 226,000 signatures to Lansing this month, and Michigan Rep. John Conyers has sought an investigation into the law's constitutionality from the U.S. Department of Justice.

According to the Detroit News, the consent agreement's three-year plan includes safeguards that would keep it in place regardless of what happens to the emergency manager law.

The three-year agreement or "recovery plan" will remain in "full force and effect" even if Public Act 4 is repealed, according to the document.

Read more here.

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Richard Mack, representing AFSCME Council 25 President Al Garrett had some harsh words for the consent agreement at City Council Tuesday morning.

Mack's main point was that the consent agreement gives Council the runaround, virtually eliminating the body from the governing process.

"He doesn't even want you involved in the creation of the budget," Mack said of Gov. Rick Snyder. "That's one slap in the face -- not only do you no longer have right to propose a budget to be rejected by the state, he doesn't even want you involved in the first place."

Mack also noted that the proposed consent agreement does not include a budet proposal.

"He's asking you to sign off on an agreement without even knowing what budget you'll sign off on," Mack said. "You're going to the voting booth and not even being told who the candidates are 'til you leave the voting booth!"

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The Detroit Free Press reports that the proposed consent agreement would establish a nine-member board with full control over Detroit's finances.

The board would have broad authority over the city’s financial operations, including:

• Reviewing and approving the city’s operating and capital budgets

•Reviewing and approving the sources of any funding for the city

•Assisting in the creation of a new fiscal authority

•Reviewing and evaluating any plan related to the consolidation, disposition or elimination of city departments.

The paper does not note whether such a body would be able to raise or adjust taxes.

Read more here.

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According to WDIV, City Council Member James Tate says the governor's proposed consent agreement is more a "one-way edict."

Read more.

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