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Decision On Detroit Consent Agreement Or Emergency Manager Comes Due

The Huffington Post  |  By Posted: 03/26/2012 8:30 am Updated: 03/26/2012 10:55 am

Detroit's state-appointed financial review team is scheduled to meet Monday afternoon to announce the fate both of Detroit's financial future and system of governance.

Under Public Act 4, the law that governs the review team and the emergency manager process, the group of nine must decide today whether to reach a consent agreement with city leaders or recommend Gov. Rick Snyder appoint an emergency manager to take control of Detroit. The review team already announced last week that Detroit meets the criteria of a "severe financial emergency."

The review team's decision comes after 90 days of starts and stops, as litigants wrangled over whether the team could meet in private. The team was forced to hold open meetings after a ruling from an Ingham County Circuit Court judge, and its members could still be held in contempt of court for circumventing that decision. Judge William Collette attempted to block the review team from continuing to meet before the contempt hearing scheduled for later this week, but an appeals court on Friday overturned his decision at the state's request.

The Monday decision deadline also comes nearly four and a half months after Mayor Dave Bing announced Detroit faced a financial crisis. Recent cash-flow statements show the city's general fund balance will go into the red in May and reach a $46.8-million negative balance by the end of the fiscal year in June. That's on top of nearly $12 billion in longterm liabilities.

Since November, Bing and City Council have been working to shore up Detroit's finances and craft a deficit-elimination plan, under the threat of an emergency manager takeover. The mayor has outsourced the Detroit Department of Transportation and laid off 1,000 city workers. He negotiated massive concessions with all 30 city unions, which members ratified on Friday.

But the governor and State Treasurer Andy Dillon have said the city's voluntary actions aren't good enough. Both Bing and Snyder have said they would like to avoid an emergency manager for Detroit, but the review team's finding of a "severe financial emergency" leaves officials little choice under the law, unless they can come to a so-called consent agreement.

The state offered its own version of an agreement two weeks ago, but City Council and Bing dismissed it as far too stringent. They have been working together to come up with their own document to present to the state.

So as the Monday deadline looms, an emergency manager remains on the table. An emergency manager would have the power to break city contracts and dismiss elected officials, as well as sell or lease city assets, and serves at the will of the governor. Critics say it amounts to an end-run on democracy and elected representation.

A petition drive to suspend the emergency manager law and put it up for a statewide referendum hangs in the balance, with more than 220,000 signatures delivered to the Secretary of State, organizers say. The final count won't come until the end of April.

In the meantime, the Detroit financial review team and the governor may say they have little choice but to appoint an emergency manager to solve Detroit's financial problems. Or city officials may be able to eke out a last-minute consent agreement allowing city officials or a special appointed board many of the same powers as an emergency manager.

The deadline? 3 p.m. Monday.

This is a developing story. Stay with HuffPost Detroit for updates.

Flickr photo by mnemophobe.

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