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Committee to decide if Detroit needs EFM

By Angela Son, Daily Staff Reporter
Published January 16, 2013

After Republican Gov. Rick Snyder signed the emergency financial manager law on Dec. 18, focus again turned to the review team that has been looking at Detroit’s troubled finances.

The team of six members, including State Treasurer Andy Dillon, has been meeting since early December with city officials in order to determine whether a financial emergency exists in Detroit.

The review team is due to issue its recommendation to Snyder by mid-February. The governor will make a decision on whether or not to appoint a financial manager to take over the city’s finances.

State Representative Thomas Stallworth III (D-Detroit) said the idea of an emergency manager in Detroit is feasible, but remains unconvinced such an appointee would make a difference.

“I’m not sure if the financial managers can do anything better than cut services, which only continues the decline of the city,” Stallworth said. “What we need is an environment that allows us to stabilize and grow.”

Stallworth said that real, coherent support from the state legislature seems to be absent. The city needs to fix legacy problems and augment core services that attract people to live there. He added that the city needs an inclusive discussion that effectively engages the local Detroit’s residents.

Snyder’s spokesman, Caleb Buhs, said the review team is looking into appointing an emergency financial manager, as well as a few other options.

“There’s no determination that’s been made that an emergency financial manager will be going into Detroit,” Buhs said. “That is what the review team’s currently looking into.”

Buhs said a financial manager would have powers including in the ability to take immediate actions, modify contracts and negotiate with stakeholders to receive concessions that elected officials may be unwilling or unable to leverage.

“Part of the concern in Detroit currently is that the mayor and the city council had some trouble working together to get things done, essentially,” Buhs said. “And if a manager were in place, it would be one person leading the charge, so maybe they can take action quicker.”

The likely alternative to a financial manager would be a consent agreement. If that’s the case, Buh said the review team would negotiate a consent agreement with the city and lay out a plan relieve financial troubles.

“They’re currently working under a consent agreement (between the state and Detroit) from a previous review team … that was under Public Act 4, which went away with the vote in November,” Buhs said.

State Representative Jeff Irwin (D–Ann Arbor) argued that emergency managers have not been successful in turning around the city’s financial standing. He cited Robert Bobb, an emergency financial manager for Detroit Public Schools, who was appointed with a $300-million annual deficit and left office with an even larger deficit two years later.

Irwin said he doubts the state will appoint an emergency manager because their abilities are limited to layoffs and reducing workers’ wages.

“It is odd to believe that a city struggling with serious financial problems can be fixed by bringing in some individual from the outside with a magic wand,” Irwin said.


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