Detroit City Council Will Appeal Fiscal Emergency Finding For Detroit

03/12/2013 08:40 am ET | Updated May 12, 2013
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LANSING, Mich. — Detroit City Council members on Tuesday made a longshot appeal of the state's declaration that the city has no adequate plan to fix its fiscal crisis, arguing that more time is needed to implement a budget-cutting deal reached with the state less than a year ago.

"Stay the course. A deal's a deal," David Whitaker, the city council's research and analysis director, told a deputy state treasurer presiding over an hour-long hearing in Lansing.

In a report to Gov. Rick Snyder last month, a state-appointed review board declared that Detroit was facing a financial emergency because of its $14 billion of debt, $327 million budget deficit and other issues. The board said Mayor David Bing and the city council lacked a good plan to turn things around, and the Republican governor agreed, setting in motion the possible appointment of a manager to oversee the city's finances.

While the council decided to challenge the finding, Bing declined to go along, saying it was a losing battle.

Also speaking at the hearing was a member of the review team. State Treasury Department lawyer Frederick Headen said there was a "lack of enthusiasm" from city officials to implement a consent agreement struck in April 2012, even after legal appeals had been exhausted. He said Snyder's appointment of a second review team late last year was effective in getting the city to act, but that was already after the board had begun to determine that a financial emergency existed.

City officials countered that a plan is in place, though, and the understanding was always that it would take years to implement it.

Chief Deputy Treasurer Mary MacDowell is expected to report back to Snyder within days. He is expected to stand by his finding and appoint an emergency manager.

Council President Charles Pugh told reporters after the hearing that he was holding out hope that Snyder may ultimately not appoint a manager

"I feel like the governor's a reasonable person," he said. "We feel like we have the tools necessary to do it, that somebody else does not have to come in and do it for us."

The report given to Snyder said the accumulated deficit as of June 30, 2012, would have topped $900 million if Detroit leaders in recent years had not issued bonds to pay some of its bills.

Also Tuesday, Bing separately released a progress report on the city's restructuring plan. It said Detroit has implemented or identified cost savings to address its $150 million annual structural deficit.

The report forecast savings from unpaid furlough days imposed on 1,200 workers, pension cost deferrals, job cuts and vendor spending cuts.


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