Michigan Gov. Rick Snyder pushed an optimistic view of Detroit's future under the newly brokered financial agreement between the city and the state, despite the deal's lack of direct financial assistance for the struggling city.
Under the deal, the city gets state approval of a $137 million bond package, which should help the city stay solvent until the fiscal year ends in June. From there, the consent agreement establishes strict budget and operational reforms to stabilize Detroit's finances.
Detroit City Council agreed to the plan in a 5-4 vote Wednesday night, after the mayor, state Treasury officials and the governor pushed its passage. The consent agreement gives the state oversight of Detroit's finances and establishes a nine-member financial advisory board, chief financial officer and project management director with control over the city's purse.
In March, a financial review team found Detroit in a state of "severe financial emergency," with a projected budget deficit of $270 million. Snyder said the consent agreement was the only way to get the city back on track, short of appointing an emergency manager.
The agreement includes an ambitious reform plan to restructure city services and collective bargaining agreements. It also requires the city to balance its budget or face a full state takeover.
"They've committed not to overspend their revenues," explained Treasurer Andy Dillon. "There's real teeth in this agreement."
But there is no cash for the city, and while proponents of the plan say it will resolve Detroit's long-term debt and obligations, others worry city services will suffer if officials are forced to balance the budget.
"There will have to be cuts," Dillon conceded, but Snyder quickly interjected.
"It doesn't mean you're not being innovative or providing better services," the governor said. "Just because they have to cut the budget doesn't mean it's at the expense of having worse services."
Snyder said he didnt like the word "privatization" but that the city would have to look for bids for some services. Detroit has already placed its bus system under private management and is looking to do the same with the lighting department and the Department of Human Services.
Among other measures, the plan requires the city to reform public health and safety, lighting and transit -- all things the governor said will help "grow" Detroit. He said a robust plan with strict goals and consequences was necessary to ensure Detroit gets those things done.
"It's important they be there because -- not this administration or city council -- but the last 30 to 40 years, implementation and financial stability have been challenges."
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