By Steve Neavling
DETROIT Feb 19 A state-appointed team of
experts unanimously concluded on Tuesday that Detroit faces a
fiscal emergency, leaving Governor Rick Snyder with a
controversial decision whether to appoint an emergency financial
manager to force changes.
Michigan's treasurer, Andy Dillon, who was part of the
six-member review team, said he did not expect the city to be
forced into filing for bankruptcy, the most-feared and most
radical action that could be taken to impose a new order on
Detroit's troubled finances.
The review team appointed by Snyder said Detroit, which has
been hemorrhaging cash amid a declining population and a
decimated economy, has not made the financial decisions that
will put the city on a path to recovery.
"The team collectively believes the city needs assistance in
making the difficult decisions necessary to achieve the
significant reforms that are so crucial to the city's long-term
viability," Dillon said in a statement.
The report did not officially recommend the appointment of
an outside manager, although Dillon said the review team
believes one is needed. The team, however, felt the decision
should be left up to Snyder, he said.
"The city continues to struggle mightily beneath the weight
of chronic deficits and its long-term liabilities," Ronald
Goldsberry, an independent consultant and member of the review
team, said in the statement. "Add to the mix a city governance
structure that resists meaningful, structural change, and you
have what we have deemed a financial emergency."
The report described a chaotic administration of the city.
For example, it said Police Department and city officials gave
differing figures on police staffing, and the review team could
not resolve the discrepancies.
"Operational dysfunction contributes to the city's serious
financial problem," the report said.
Dillon said at a press conference that he did not anticipate
a bankruptcy filing by Detroit, which if it were to occur would
be the biggest municipal filing in U.S. history.
"I do think we can navigate around this," Dillon said.
DEFICITS AND DEBT
Detroit Mayor David Bing and the city council would stand to
lose much of their power if an emergency manager is appointed.
"If the governor decides to appoint an emergency financial
manager, he or she, like my administration, is going to need
resources -- particularly in the form of cash and additional
staff," Bing said in a statement after the report was released.
The report said Detroit continues to deplete its cash
reserves and faces a cash deficit of $100 million by June 30
without significant spending cuts. The city has long-term
liabilities including pensions exceeding $14 billion, it said.
Snyder, a Republican, assembled the review team in December
after slow progress on restructuring Detroit's sagging finances
and operations under an April 2012 consent agreement between the
city and Michigan.
No other American city in recent decades has faced a decline
in population as steep as Detroit's. Once the fifth largest U.S.
city that shined as the birthplace of the U.S. automotive
industry and Motown music, it now ranks 18th with about 700,000
people. With the exodus of residents and jobs, the city has
suffered from declining tax revenue and rising crime while
saddled with the infrastructure and labor costs of a bygone era.