March 12, 2012 / 10:35 PM / 6 years ago

Michigan to present Detroit consent agreement on Tuesday

DETROIT (Reuters) - The state of Michigan plans to propose a restructuring solution to Detroit’s city council on Tuesday that would allow the city to maintain its elected leadership as well as wield more power to cut costs and make operational changes.

In a statement on Monday, Detroit Mayor Dave Bing’s office said it has had discussions with Michigan Governor Rick Snyder’s staff about the content of a possible consent agreement.

Such an agreement would have state-mandated targets that would need to be met by city leaders in an agreed timeframe. Bing’s office said the agreement must be crafted so the “core authority” to manage Detroit remains with the city.

“The mayor believes the consent agreement the governor plans to present to the city council tomorrow should include a process based on accountability and transparency,” Bing’s chief of staff, Kirk Lewis, said in a statement.

A consent agreement would give the city council more authority than it has now to push cost cuts and changes, and negotiate with vendors and unions. But this structure would not give the city as much latitude as an emergency manager might have to overhaul operations.

Detroit is expected to run out of cash by May. In December, Michigan Governor Rick Snyder appointed a team to review the city’s finances, a move that raised the possibility that an emergency manager could take over operations.

Bing’s office has not been formally notified of the team’s recommendation, according to Monday’s statement.

Bing has repeatedly expressed his opposition to the appointment of an emergency manager that would strip the council of much of its power. Snyder has also expressed his preference for a consent agreement.

Detroit’s tax base has been pummeled by population decline, widespread foreclosures and a shrinking business community. The lack of revenue, combined with rising retiree health care and pension costs, has pushed the city into a financial crisis.

Reporting by Deepa Seetharaman, Editing by Gary Crosse

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