Jan 10 Whether or not the state of Michigan
takes over Detroit's finances could depend on recent action by
the city council to approve contracts tied to city's
restructuring and oust the corporation's counsel.
Governor Rick Snyder said on Thursday that the Detroit
Review Team he appointed last month to assess the city's
finances would "analyze whether the actions ... were sufficient
to actually address the city's short-term cash crisis."
The Republican governor also said he wanted the team to
consider the city's options for addressing long-term
"It is also clear that the city faces significant and
daunting long-term financial obligations that continue to
threaten its viability and future," Snyder said in a statement.
The additional tasks could extend the time it takes the
review team to make recommendations.
Frustrated by the slow pace of fiscal reform and worried by
Detroit's bleak long-term outlook, state officials launched a
review on Dec. 11 that could culminate in the appointment of an
emergency financial manager, who could take the city into
federal bankruptcy court. That move could in turn be blocked by
A Chapter 9 municipal bankruptcy filing by Detroit would be
the largest ever in the United States.
The city of 700,000 has been hit by a steep decline in
population, years of severe budget deficits and escalating
employee costs. The state intervened in late 2011, which led to
a consent agreement giving it some oversight over its biggest
The process has been slowed by disagreements between Mayor
Dave Bing and the nine-member city council on reform measures
and litigation challenging the validity of the consent agreement
brought by Detroit's corporation counsel.
On Tuesday, the council in a 6-3 vote approved four
contracts that are among goals set by Michigan officials for the
release of $30 million in proceeds from a bond sale that raised
$137 million for the city's near-empty coffers.
In December, Detroit received $10 million of the proceeds
after the council agreed to another prerequisite: Hiring law
firm Miller Canfield to work on consent agreement issues.
The contracts covered financial restructuring and review
work and an evaluation of the city's pension and healthcare cost
reduction alternatives. The council also approved Bing's request
to remove Krystal Crittendon from her position as the city's
In a statement, Bing said he welcomed the governor's action
to ask the review team "to acknowledge the progress being made
by the city."