Jan 24 Two Detroit-area local governments face
such severe financial difficulties that an official emergency
exists, Michigan Treasury officials declared on Friday, setting
the stage for the potential appointment of emergency managers to
restructure their finances.
State treasury officials announced that review teams
appointed in December determined that a financial emergency
exists in the city of Highland Park and Royal Oak Township. That
action sets a 10-day deadline for Governor Rick Snyder to agree
or disagree with the determinations.
If Snyder, a Republican, agrees with the recommendation, the
two local governments would join Detroit and six other cities,
along with four school districts, as operating in a condition of
Eight are operating under state-appointed emergency managers
and three with consent agreements, according to the state
Determinations of a fiscal emergency are pending in one
other city and two school districts. The cities of Ecorse and
Pontiac are transitioning out of their financial emergencies
under the guidance of state-appointed advisory boards.
Under a 2012 Michigan law, local governments have four
options for dealing with their financial emergencies: a consent
agreement, an emergency manager, a neutral evaluation process or
Chapter 9 municipal bankruptcy. The law allows for a bankruptcy
only with permission of the governor.
In the case of Detroit, Snyder in July gave the green light
for the largest-ever municipal bankruptcy filing. Kevyn Orr, the
city's emergency manager, opted for bankruptcy to help Detroit
deal with a debt burden that topped $18 billion.
In the latest two cases, a state review team found Highland
Park's deficit in its water and sewer fund more than doubled to
$12.5 million at the end of fiscal 2013, while its unpaid bills
at the end of October totaled about $19.5 million, including
$18.2 million owed to Detroit for water and sewer services.
Royal Oak Township's review team found the local government
failed to adopt budgets in a timely manner and did not amend
spending plans when revenue fell below budgeted amounts. The
township also had a deficit of nearly $300,000 at the end of