Michigan governor names team to review Detroit finances

Tue Dec 27, 2011 5:08pm EST

The Michigan Central Train depot sits vacant  just west of downtown Detroit, Michigan, October 28, 2011.    REUTERS/Rebecca Cook

The Michigan Central Train depot sits vacant just west of downtown Detroit, Michigan, October 28, 2011.

Credit: Reuters/Rebecca Cook

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(Reuters) - Michigan's governor on Tuesday appointed a team to review Detroit's finances, a move that could end in a possible state takeover of the city as it struggles with a shrinking auto industry and falling revenues.

The team was named by Governor Rick Snyder after a preliminary review of city finances showed "probable financial stress" after Detroit was unable to tackle its mounting deficits, the governor's office said Tuesday.

The team, which includes State Treasurer Andy Dillon and other local officials, has 60 days to complete its work. The formal review was announced last week.

The appointments are the next step in the review process, which is driven by expectations Detroit will run out of cash by April.

"Given urgent and time-sensitive financial issues facing Detroit and the need to ensure critical services continue to be provided to city residents, the next step simply necessitates the appointment of a financial review team," Snyder said in a statement.

The formal review could have various results. If a financial emergency is declared to exist, the governor would have to decide on an emergency manager. But if the stress levels are considered mild, the current city management could carry on.

Detroit, with a population of 714,000, predominantly African Americans, has faced hard times as the contraction of the auto industry has led to a dwindling population and lower revenues. More than 36 percent of the Motor City's residents live below the poverty line, according to the U.S. Census Bureau.

Detroit Mayor Dave Bing has said he will cooperate with the review process, but has argued in the past his budgets are the remedy to the city's financial crisis.

"We will continue to fully cooperate with the state review process and the newly appointed financial review team," Bing said in a statement.

"At the same time, my staff and I have worked through the holiday break with union leadership on my plan that seeks savings of $102 million for this fiscal year and $258 million in fiscal year 2012-13. We will continue to negotiate until we reach agreement to resolve the city's financial crisis."

Detroit City Council President Charles Pugh had no comment on the appointment of the review team.

Members of the team include: Doug Ringler, state director of the Office of Internal Audit Services, Department of Technology, Management and Budget; Irvin Reid, retired president of Wayne State University; retired Detroit police Chief Isaiah McKinnon, Conrad Mallett, president, DMC Sinai Grace Hospital; and Jack Martin, certified public accountant at Martin, Arrington, Desai & Meyers.

Also on the team are: Glenda Price, former president of Marygrove College; Shirley Stancato, president of New Detroit, whose mission is to improve race relations in the city; Frederick Headen, director of the state Treasury department's Local Government Services Bureau; and Brom Stibitz, senior policy adviser for the Treasury department.

Detroit, once one of the most populated cities in the United States, lost 25 percent of its residents between 2000 and 2010, the fastest decline for any municipality with more than 100,000 residents besides New Orleans.

(Reporting by David Gaffen and Chip Barnett in New York; additional reporting by Karen Pierog in Chicago and John Stoll in Detroit; Editing by Andrew Hay)

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