(Corrects names of board members in eighth paragraph. Ken
Whipple instead of Ken Wippel and Darrell Burks instead of
DETROIT Dec 18 Michigan Governor Rick Snyder on
Tuesday appointed a financial review team for Detroit, the
latest development in a process that could lead the city to file
for biggest-ever U.S. municipal bankruptcy.
"Given the financial crisis that continues to grip the City
of Detroit, we must move quickly to ensure city residents have
continued access to essential services they expect and deserve"
Snyder said in a statement.
Frustrated by the slow pace of fiscal reforms and worried by
Detroit's long-term outlook, state official earlier this month
launched a state review.
Last week, the first part of the process - a preliminary
review of Detroit's cash-strapped finances - was completed in
just four days and concluded in a report that the city had "a
serious financial problem."
The report said that "due to financial reporting problems,
city projections change from month to month making it difficult
to make informed decisions regarding its fiscal health."
"A cash flow estimate in August, 2012 projected a cash
deficit of $62 million by June 30, 2013, but estimates for
October and November projected deficits of $84 million and $122
million respectively," the report said.
That opened the door to a deeper look into the city's
The financial review team appointed on Tuesday includes
State Treasurer Andy Dillon, Auditor General Thomas McTavish and
two members of the financial advisory board, Ken Whipple and
The team will conduct a new review that could culminate in
the appointment by the governor of an emergency financial
manager. Such a emergency manager would have the authority to
allow the City of 700,000 to file for protection from creditors
under Chapter 9.
Detroit has been 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
Mayor Dave Bing set a media conference for Wednesday to
discuss his restructuring plan for Detroit.
A new bill approved last week by the Michigan Senate and
House, which gives fiscally troubled local governments options
to achieve solvency, has no immediate impact on Detroit. If it
is signed by Snyder, it would not take effect until March.
(Reporting by Tiziana Barghini; Editing by Greg McCune and