DETROIT Dec 11 Michigan will release $10
million in funds to Detroit after its city council took action
on Tuesday on key measures tied to financial reforms.
But the state also launched a review that could result in an
emergency manager for the cash-strapped city, a spokesman for
Michigan's Treasury Department said.
Terry Stanton, the spokesman, said the council's action met
conditions agreed to by the state and Mayor Dave Bing for the
release of $10 million raised through a bond sale earlier this
year. The release of another $20 million remains tied to the
city's meeting other conditions, he added.
In the meantime, state officials frustrated by the slow pace
of reforms in Detroit moved ahead with a 30-day preliminary
review of the city's finances, according to Stanton.
Facing a possible state takeover and a growing deficit, the
city council reversed course and approved a controversial
contract that had been a sticking point for the release of some
of the money.
In a 5-4 vote, the council approved the appointment of law
firm Miller Canfield to work on issues related to a consent
agreement that earlier this year gave the state some oversight
of Detroit's finances. Last month, the contract with the law
firm was rejected by council members, who cited alleged
conflicts of interest by the law firm and concerns over its
Council President Charles Pugh told reporters after the
meeting that he "tried to hold his nose" to vote for the
contract so that the city could avoid a state-appointed
emergency financial manager.
"We're just trying to do what's right," he said. "It's a
dance. You've got to satisfy the citizens. You've got to satisfy
your colleagues. You've got to satisfy the mayor."
Other measures the state has tied to the release of some
bond money also received council approval, including contracts
for auditing services and for specific audits to uncover
potential worker's compensation fraud and to determine dependent
eligibility for city benefits.
The city of 700,000 has been hard hit by a steep population
decline, years of severe budget deficits and escalating employee
costs, all of which led state officials to begin an intervention
process last year.
Mayor Bing thanked council members for their actions and
reiterated that he is working to avoid the appointment of an
emergency manager by the state.
A financial update released by the city on Monday indicated
its cash flow position could erode in the fiscal year that ends
June 30 to a negative $113.7 million from a negative $76.7
million that was forecast last month.
The city's oversight board, which was created under the
consent agreement that allowed Detroit to avoid a
state-appointed emergency manager, voted unanimously on Monday
to support Michigan Treasurer Andy Dillon's plan to launch the
The appointment of an emergency manager would bring Detroit
a step closer to a possible bankruptcy filing, as would
legislation that could be passed by the Michigan Legislature
this month that would give fiscally struggling local governments
like Detroit options for fixing their problems, including
Chapter 9 municipal bankruptcy, emergency managers and consent