Dec 5 Ongoing fiscal distress and political
turmoil in Detroit are ratcheting up speculation that the state
of Michigan could step in and appoint someone to oversee the
State Treasurer Andy Dillon met with some top Detroit
officials on Wednesday amid growing concerns about "the city's
near-term ability to meet its financial obligations and its
long-term viability," Michigan's Treasury Department said in a
"While we continue to work collaboratively with the city to
move it forward, the (emergency financial manager) option cannot
be taken off the table," the statement said. "As the treasurer
has noted many times, delaying reforms and tough decisions only
promises to make eventual solutions more difficult and painful."
Mayor Dave Bing said his administration "has had discussions
with the state regarding an emergency financial manager
previously." But he noted that until the state makes a final
determination, he was continuing to implement his restructuring
The appointment of an emergency manager would bring Detroit
a step closer to a possible municipal bankruptcy filing because
a manager is a prerequisite for that move under a current state
law. However, that law, which took the place of a stronger
emergency manager law that Michigan voters repealed on Nov. 6,
gives also the state the opportunity to block the path to
EMERGENCY FINANCIAL MANAGER HAS LESS POWER
Unlike an emergency manager under the repealed 2011 law, an
emergency financial manager's power would be more limited and
would not allow for the suspension of collective bargaining
The city of 700,000 has been hard hit by a steep population
drop, years of severe budget deficits and escalating employee
costs -- factors that led state officials to begin an
intervention process a year ago.
Michigan's biggest city is projecting it will run out of
cash this month unless it receives $30 million of bond proceeds.
The state has tied the release of that money to certain
conditions, including the hiring of law firm Miller Canfield to
work on issues involving a consent agreement between Detroit and
But the city council last month rejected a contract with the
law firm and a coalition of Detroit public sector labor unions
said on Wednesday they filed a complaint with Michigan's
Attorney Grievance Commission alleging conflicts of interest by
the law firm.
A comment from Miller Canfield was not immediately
The city council and the unions have been at odds with some
of the changes Bing, state officials and an oversight board
believe are needed to get Detroit's finances on better footing.
The city's path to a fiscal restructuring is further clouded by
ongoing litigation over the state's move to resurrect a former
emergency manager law in place of the repealed 2011 law.
Using the former law to appoint a manager for Detroit would
likely spark new litigation.
Meanwhile, the city council on Wednesday approved a budget
amendment that Detroit finance officials said was needed to
complete the city's fiscal 2012 comprehensive annual financial
report (CAFR) by year end in order to receive state revenue-
sharing payments. Michigan in the past has withheld the payments
when Detroit was tardy in completing its CAFRs.