Richard Ravitch to Oversee Detroit Finances

by | November 18, 2014

By Matt Helms

Richard Ravitch played a key role in pulling New York City back from the financial brink in 1975 and now, nearly 40 years later, the watchdogs working to make sure Detroit stays on the straight and narrow after bankruptcy will be hearing doses of his brash and blunt advice.

The 81-year-old, a lifelong liberal Democrat and former lieutenant governor of New York, was appointed last week by Michigan's Republican Gov. Rick Snyder to serve as a senior adviser to the Financial Review Commission that will oversee Detroit's fiscal decisions for at least 13 years. He'll also serve as a special liaison to the Snyder administration. The commission's duties take effect the same day the city officially emerges from bankruptcy, a date yet to be decided but likely by year's end.

Ravitch brings a Big Apple sensibility -- colorful language, no fear of having and sharing strong opinions -- built over a career in which he also guided the New York State Urban Development Corp. back from insolvency. He also helped restore and expand the Greater New York public transit system after years of neglect.

New York's financial crises were big national news, but Ravitch said he's learned over the last six months -- as he served as an unpaid adviser to U.S. Bankruptcy Judge Steven Rhodes during Detroit's Chapter 9 case -- that Motown's problems run far deeper.

"Detroit is in much worse shape than New York City was fiscally, physically, socially," he said in an interview with the Free Press. "It's amazing things were going on for 50 years and no one did a damn thing about it. It's amazing to me."

Ravitch said his role as an adviser to Detroit's nine-member review commission is evolving. But he says the commissioners -- and Mayor Mike Duggan -- have enormous challenges ahead.

"The primary thing the governor would like is my opinion on the financial aspects of this as it proceeds, and any questions this board may have or the state may have with respect to other things that are happening," Ravitch said. "I hope that informally I may be helpful in Washington to the state and the city."

He may not be the public face of Detroit's fiscal watchdogs, but New York political analysts who've watched him in action said Ravitch's influence will be felt, even if it's mostly behind the scenes.

In New York, he played a much more visible role, bringing together warring unions, state and city politicians of both political parties and bankers to hammer out deals in which all sides did what they vowed they'd never do.

"He comes out in front of cameras and he's very accommodating," said Jay DeDapper, a political analyst and former journalist who covered New York politics. "Inside the room he was cutting their heads off. He definitely makes things happen."

Steven Greenberg, a longtime Albany, N.Y., political analyst and pollster for that city's Siena College, said that when Ravitch served as lieutenant governor under then-Gov. David Paterson, "he had no problem speaking out on fiscal issues whether or not he was on the same page as the governor."

Ravitch is "much more about substance than he is about style," Greenberg said. "He will definitely bring expertise on how to recover from a fiscal crisis and how to build long-term fiscal stability. And he will express to you in the strongest terms, irrespective of how those terms are heard by various audiences."

Ravitch recalls the bargaining to avoid a New York bankruptcy, some held at his apartment, that resulted in unions agreeing to job cuts and pay freezes, creditors taking hits they swore they wouldn't take and banks agreeing to sell bonds after swearing off underwriting New York.

"Everyone put a big piece of their ass on the table," he said, pushed by the notion that "to go into bankruptcy would be an admission that democracy can't solve its own problems."

He called it unfortunate that Detroit couldn't fix itself without resorting to the nation's largest-ever Chapter 9 petition, but he said the bankruptcy's quick pace and the state, philanthropic groups and the Detroit Institute of Arts coming together on a grand bargain avoided a more chaotic outcome.

In that sense, the resolutions to Detroit's bankruptcy and New York's financial crisis were similar, Ravitch said. Community leaders and various parties agreed to swallow tough, unpalatable measures to avoid the abyss. But he notes that New York had far more clout in its state than Detroit does in Michigan.

While Detroit withered for decades under "totally bipartisan neglect," Ravitch said, New York's problems were impossible to ignore. "In 1975, the state took over the cost of the court system, the city's education system -- they wrote big checks to the city, literally and figuratively, to keep the city from going into bankruptcy," he said. "The governor was from New York City. His political base was New York City.

New York City controlled one body of the Legislature" and contributed as much as 50% of the state's income tax revenue.

Detroit, on the other hand, saw its influence fade as its economy faded and its population dropped, reducing representation in Lansing.

Snyder spokeswoman Sara Wurfel said the governor has no problem seeking advice from a liberal East Coast Democrat.

"That's not how the governor operates," she said. Ravitch "has some unique background and expertise. You can't put that in a box."

Ravitch and the members of the review commission will be unpaid, Wurfel said, although they'll likely be reimbursed for expenses related to the job, such as travel.

Asked if he were optimistic about Detroit's chances of bouncing back, Ravitch said he didn't want to underplay the risks ahead.

"I think it's terribly important that no stone be left unturned to make it come back," he said. "I'm encouraged by having dozens of young people who've let me know they want to go to Detroit to help. There's an excitement, a challenge to this thing."

Critical, he said, will be the independence and effectiveness of the oversight board, although he was quick to say it's not because he doubts that Duggan is in any way incapable.

In fact, Ravitch had high praise for Duggan, saying he was attracting top-flight talent to his administration. But he said the mayor has a Sisyphean task, with no certainty that Detroit will stay within budget or that further state and federal cuts won't amount to "fiscal stress rolling downhill."

Duggan said he's worked with Ravitch in recent months, particularly as terms of the review commission were negotiated in the Legislature. And when Duggan asked Ravitch for names of top talent he could recruit to help the city's economy rebound, Ravitch told him to reach out to Carol O'Cleireacain.

Duggan hired O'Cleireacain last month as deputy mayor for economic policy, planning and strategy, leading the city's efforts to find outside sources of funding so Detroit can become less dependent on tax revenues. She has served as budget director for New York City, deputy state treasurer of New Jersey and has extensive background working with financially troubled states and cities.

Ravitch "has had great influence on me already," Duggan said Friday, calling him "a common-sense financial professional."

Ravitch said that before Rhodes brought him on as an adviser, he'd only been to Detroit once, for a lunch with Mike Ilitch in the early 1990s. He said he recalls seeing then that Detroit's problems with decay were evident, and now that the city has a shot at recovery, he'll do his part in making sure the review commission helps right the ship.

"There are 700,000 human beings living in Detroit, and their lives have obviously been affected by the deterioration in the quality of their surroundings and the quality of the government that managed their public affairs," Ravitch said. "We are a society in which we're trained to care about people in trouble, and if we can't fix Detroit, that's a hell of a comment about whether democracy solves problems. If people don't give enough of a damn that this city becomes a viable place again, it will be a lot easier for other places to go to hell, too."

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