04 March 2013

Detroit Mayor Bing against an Emergency Financial Manager

Story first appeared on The Detroit News -

Mayor Dave Bing said Friday he does not favor an emergency manager to solve Detroit's problems, but that he is weighing the impact of Gov. Rick Snyder's announcement to determine the city's next steps.

"There needs to be additional conversation with Lansing regarding their plan to move the city forward," Bing said. "We have always said that we need help from Lansing to implement our initiatives such as public safety, transportation, lighting and others.

"If, in fact, the appointment of an emergency financial manager both stabilizes the city fiscally and supports our restructuring initiatives which improve the quality of life for our citizens, then I think there is a way for us to work together.

Bing added he firmly believes "Detroit's best days lie ahead, and my sole focus has been and will continue to be working to bring about the great Detroit that we all know can be achieved."

Snyder on Friday declared Detroit's financial problems too deep for the city to fix on its own and said he believes an emergency manager is the best way to reverse the downward spiral.

Calling it a "sad day" but also one of promise, Snyder said he concurs with a review team report released last week that concluded Detroit is in a state of financial emergency. He called on everyone to fix the enormous problems of the once-prominent city.

"It's not hard to justify that conclusion," the governor said during a town hall meeting Friday with media and invited community stakeholders. "The question is it's time to say we should stop going downhill. We lost that formula, but we can do it again."

Snyder at times praised city leaders for working to fix problems in Detroit, but said it's clear the consent agreement forged last April hasn't worked swift enough.

The governor said there's a leading candidate for the position, but Snyder is not naming the person, noting the city has a 10-day window to appeal that ends March 11. A hearing for a possible appeal is set for March 12.

Today "is a day to call all hands on deck… to say there's been too much fighting, too much blame, not enough resources, not enough people working together," he said. "The key answer I believe all of us want to get to is growing the city of Detroit."

Friday's decision marks a watershed moment in Detroit's historic collapse, which has been decades in the making.

Last week, a state review team concluded Detroit's financial crisis requires state intervention "because no satisfactory plan exists to resolve a serious financial problem."

The review team found Detroit's cash-flow deficit is nearly $100 million. That's on top of an accumulated deficit of $327 million. The city also has $14.9 billion worth of unfunded pension and employment retirement liabilities, according to the review team report. In five years, it needs $1.9 billion to begin making payments on the debt.

Snyder said he believes an emergency manager can put Detroit on the right financial path within 18 months. After that time, the city council can vote to remove the EM under state law.

The governor said he understands not all problems will be fixed within 18 months, but he wants Detroit to be on that path and then be able to transition out of an emergency manager.

"There are some structural problems that have made this much more difficult and stopped the solutions," Snyder said.

Still, residents are already disappointed by Snyder's announcement.

"I don't think it's right at all,"Angela Woodmere, 37, said Friday outside the Maccabees Building on Woodward. "We elected Detroit politicians and Snyder shouldn't be dictating how they run the city."

But others praised it as a step in the right direction for a city that struggles to provide basic city services to residents.

"I'm glad to have a light at the end of the tunnel," said city resident Tim Gelletly, 34, who has lived on the city's west side for 11 years. "There is a real need for an increase in the quality of services for residents and this could be that need met."

Once the nation's fourth largest city, Detroit was hailed as an industrial hub with nearly 2 million people. Today, after a half-century of population loss, chronic mismanagement and inadequately funded city services, the move solidifies the city's standing as a model of urban decline.

"In this particular case, you have to in some degree look at it as a hostile takeover," said David Bositis, of the Joint Center for Political Studies, a national think tank in based in Washington, D.C.

"Detroit is a very democratic city and it's being taken over by a very Republican and conservative state government. It's not a good day, but things can change."

And union leaders went on the attack early Friday afternoon by blasting the idea of emergency management in Detroit.

"When times are tough, it is especially important that decisions are made democratically and locally," the metro Detroit AFL-CIO said in a statement. "Today's announcement by Governor Snyder recommending an emergency manager does a disservice to every Detroit citizen. It will lead to cuts in vital services, which will benefit out of town creditors and make our communities less livable."

Earlier, Detroit City Council members called the decision to appoint an emergency manager premature and said they are doing everything they can to avert the takeover. "It would be irresponsible for us to not provide some response," Councilwoman Saunteel Jenkins said of a plan council members are compiling to send to Snyder." If they don't accept it, they don't accept it. We have to do everything we can to try to stop (emergency management) from happening."

Councilwoman JoAnn Watson reiterated her stance that the city should pursue a legal challenge of emergency manager law.

"We should not be going and begging. That would be a big mistake," Watson said. "The citizens would not know who to trust."

Greg Bowens, a political expert and former press secretary for former mayor Dennis Archer, said an emergency manager would be a devastating blow for the morale for the people of Detroit.

"In the end, it means the governor does not have the faith in the people of Detroit to govern themselves in a responsible manner," Bowens said. "It means that in some measure a failure of the system to be able to produce the kind of leaders that is needed to hold a city together. The impact that it will have on everything from the elections to the outlook that people have about the future could not be overstated."

Friday's decision makes Detroit the only major city in the country to operate under some sort of state control.

In Michigan, the cities of Allen Park, Benton Harbor, Ecorse, Flint and Pontiac and school districts in Detroit, Highland Park and Muskegon Heights are under emergency managers.

"Emergency management means the death of democracy in Detroit. It also means disaster for Detroit with the track record of the emergency manager," said the Rev. D. Alexander Bullock, president of the Detroit Chapter of the Rainbow Push Coalition. "There should be a hearing on this. The governor should reconsider."

The only major cities in the country that teetered around insolvency are New York City, Cleveland, Pittsburgh and Washington, D. C. Each emerged out of their financial situations without the state stepping in. In 2000, New Jersey stepped in and took over the operations in Camden. Three years ago, Rhode Island took over cash-strapped Central Falls.

Municipal bankruptcy expert Douglas Bernstein said the step toward reaching fiscal stability has to be made. Detroit can no longer allow the financial problems to go on forever, he said.

"The present situation is intolerable," said Bernstein, an attorney with the Plunkett Cooney law firm in Bloomfield Hills. "(Steps to get finances in order) is recognition you've got a problem and you're on the road to fixing it, rather than continuing to dig a deeper hole."

But former City Councilwoman Sheila Cockrel said it's time for Detroit to get its fiscal house in order and the powers that an Emergency Financial Manager brings will bring about changes. She pointed out the authority the manager has to change issues such as bumping rights. When layoffs occur, the most senior employees are shifted to different departments and in some cases areas where they are not trained.

"What it says it that the financial situation has reached the point where it's absolutely essential that an emergency manager come in to increase financial discipline," Cockrel said. "There has to be better fiscal discipline and an (emergency financial manager) can do that. (But) it's a profoundly difficult day. It's not easy. There's nothing fun (or) good about it. You've got a problem, you got to face it and deal with it. Let's just get it fixed."

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