Report Urges Detroit to Pursue New Financial Agreement with State

The Detroit City Council has been advised to push for another consent agreement with the state to fix the city's financial crisis rather than the state appointment of an emergency financial manager, according to a report jointly issued by two council departments.
by | February 28, 2013

By Joe Guillen

The Detroit City Council has been advised to push for another consent agreement with the state to fix the city's financial crisis rather than the state appointment of an emergency financial manager, according to a report jointly issued by two council departments.

The report, given to the council Friday and obtained by the Free Press, calls into question certain findings that a state review team reached last week that concluded Detroit is in a financial emergency without a plan to fix itself.

The report, prepared by the council's Fiscal Analysis Division and the Research and Analysis Division, cites progress made under the current consent agreement and touts new powers to change expired labor contracts that city officials will have when the state's new financial emergency manager law takes effect in late March.

"This (new) consent agreement could give the city nine to 12 months to demonstrate continued progress with the implementation of additional changes," the report says.

But the council is still trying to figure out exactly how it wants to respond to the review team's findings, and time is running out. Gov. Rick Snyder has said he could make a decision about appointing an emergency financial manager as early as this week.

"Time is not on our side," Councilman Andre Spivey said Wednesday.

A closed-door council meeting to discuss a response was canceled Tuesday after the Free Press raised questions about the legality of the session, citing the Open Meetings Act. At its regular public meeting today, the council is to consider scheduling another closed session to discuss its response.

Several members of the council have voiced opposition to an emergency financial manager and several told the Free Press in December, long before the review team's report, that another consent agreement would be the best option.

Earlier this week, council President Charles Pugh advocated for another consent agreement instead of an EFM.

"What would an emergency manager be able to do so much more effectively than us?" Pugh said. "Whether there's going to be an extended milestone agreement, or a new consent agreement, I can't speak to that right now. But I can say that is the option I prefer."

Council President Pro Tem Gary Brown said Tuesday that the only option he would accept is an extension of the current consent agreement.

"I have never been for an emergency manager," he said. "We've made a lot of progress. We ought to be allowed to continue."

Brown said the various consultants hired in January to help with the city's financial restructuring, including Conway MacKenzie, Miller Buckfire, and Ernst and Young, should be allowed to finish their work before the city's course is set.

The latest analysis for the council echoes Brown's desire.

Snyder has until March 21 to decide whether to appoint a manager. By then, the consultants' reports will be finished and can provide the governor with a better handle on the city's finances, the report to the council says.

The consultants' work is focusing on a long-range financial plan for the city, current and future health care costs and a plan to restructure long-term debt, including potential sales of assets.

"Implementation of the city's plan, jointly developed with the State of Michigan, and enhanced by the consultants' recommendations, is ongoing and appointment of an EFM/EM would be premature," the report says.

But Councilman Ken Cockrel Jr. said that he has not decided which course he thinks is best for the city.

"I can see some pluses associated with an emergency manager," he said. "But I can also see some minuses."

Cockrel said a manager, if appointed, should have a specific agenda to carry out, so that the manager does not linger.

The report to the council is separate from a confidential analysis, drafted by the same two divisions of council, on the legal implications of the state review team's report. The law department is writing up a report this week on the same topic, council members said.

Pugh was asked Tuesday why the public should be shut out of the closed-door meeting.

"Not yet, only because we don't know what we're going to be doing yet," he said. "We've got to get consensus between the mayor's office and council before we make a full decision about what we're going to propose moving forward."

(c)2013 Detroit Free-Press

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