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Detroit fights to keep control of its finances

State may impose emergency manager

- The Washington Times - Sunday, December 25, 2011

DETROIT — In the Motor City, the fight over who gets the keys is becoming increasingly intense.

Detroit city officials and activists such as the Rev. Jesse Jackson are stepping up their campaign to retain local control as Gov. Rick Snyder, a Republican, nears a decision on whether to appoint an emergency manager to keep the financially crippled city from going under.

Hammered by foreclosures, 20 percent unemployment and governmental malfeasance, the city is facing a $47 million shortfall by June - a deadline that has residents concerned that services including fire, police and even garbage pickup would go off the rails unless the state intervenes.

The situation pits Detroit leaders struggling to maintain the city's independence against outsiders pressing for reform.

"They don't want someone from the outside running their city. They have a long history of that," says Doug Roberts, a former state of Michigan treasurer who directs Michigan State University's Institute for Public Policy and Social Research. "The best scenario is that the governor keeps pushing and says, 'I'm coming,' and they begin to make serious and quick progress internally, because they all agree they don't want the option of an emergency financial manager."

Currently, the state has begun the process of a 30-day preliminary review — a precursor to forming a formal review team that could set in motion the appointment of an emergency manager. The governor, however, has stressed that he would rather the city work matters out, and that he has no interest in the state running Motown.

As the situation in Detroit comes down to the wire, several members of Michigan's congressional delegation have approached the governor about reviewing the emergency financial manager law itself. They question its constitutionality, which has been used successfully in other Michigan cities, and they hope to meet with Mr. Snyder to discuss not only the constitutional issue, but also the emotional ramifications of the state taking over a major city.

"We are deeply concerned about how this law is igniting tensions in our local communities and dividing our state," said Sens. Carl Levin and Debbie Stabenow, both Democrats, in a letter to the governor. "This law runs counter to this cooperative spirit and is sending the wrong message to the rest of the country about what our state stands for."

Rep. John Conyers Jr. — whose wife, a former Detroit City Council member, is serving time in federal prison for her role in a bribery scandal - has taken the matter one step further. He is seeking Justice Department review of the Michigan emergency manager law and asking U.S. Attorney Gen. Eric H. Holder Jr. to intervene.

Meanwhile, as lawmakers seek to assuage tensions about a possible takeover, momentum is building behind a petition drive to gather 161,000 signatures to repeal the current Public Act 4, which gives the state power to put in place an emergency financial manager for schools and governments.

"I've got real doubts that they will be able to get them," says Bill Ballenger, the publisher of Inside Michigan Politics. "If they do, they will be fought tooth and nail by the state and everybody else in the courts."

A native of Flint, where an emergency financial manager is in place, Mr. Ballenger says that if Detroit can't fix its problems, it shouldn't be immune to a takeover.

"Why is Detroit different? Why do they get a pass?" he says of the public outrage. "It's absurd. They are either going to have to have a consent agreement between the mayor and council" or get an emergency manager.

"Frankly, I am on Snyder's side and his approach to this. It's the only way Detroit is ever going to get out of this mess is through this mechanism. The petitioners are just totally irresponsible."

Last week, the GOP-led Michigan Senate, in its closing days before the holidays, approved what has been described as a stopgap bill that allows the governor to create a transition board for cities currently under emergency revision, along with a new emergency manager in places where the problems have yet to be fixed. Democrats were angered by the measure that they said would fly in the face of the petition drive's success.

"This legislation is an end-run around the last constitutional step left to our citizens to stop bad legislation passed by the Legislature, that being the petition initiative," state Sen. Glenn Anderson, a Democrat from Westland, said in a statement. "This action by the Republican-controlled Senate and House ignores the will of the people and subverts their right to place the emergency financial manager legislation before a vote of the people."

The possibility has put Detroit Mayor Dave Bing in a tough position. He has attempted to negotiate with the city's 48 employee unions. He has asked for concessions in wages and benefits to stop the state takeover. The City Council last week approved 10 percent pay cuts for the few nonunion city workers.

The mayor is also in the process of laying off about 1,000 city employees, a painful process for city police, firefighters and bus drivers along with many from the white-collar ranks. If spending is not stemmed, the city faces a budget shortfall by April and could not cover payroll and essential city services.

Former Mayor Dennis Archer, speaking on WJR-AM radio's Frank Beckmann show Dec. 19, says union pension and retiree health care costs have been the 100-pound weight on the city for many years. Detroit, he added, cannot keep up the heavy payment burden, and he called on the current council and government to find their own solutions now on these legacy costs, something he thinks can keep the state away from Detroit's door.

Mr. Roberts, the former treasurer, however, calls it not just a Detroit problem, but an issue that affects everyone in the state. He dubs Mr. Bing's efforts "sincere," but says if an emergency manager is ultimately put in place, "the single biggest loser would have to be the mayor."

He compared the city's legacy woes with what ultimately sunk General Motors Corp. into bankruptcy protection - a move that ultimately gave the company a chance to turn its fortunes around.

"I think everyone here is trying to walk a little gingerly because they know every step is fraught with difficulties," he said. "The union could take a step that says we disagree and we understand and will come to work and sue you in court. Or, the other step is they say we disagree and are not showing up. That is a serious issue."

He said he hopes Detroit's leaders will use the little bit of time they now have to work on a mutual solution, but he is not optimistic.

"I think ultimately an [emergency financial manager] is going to have to be appointed," he said. "Some people in Detroit already support [the move], and that is not the same ones who necessarily show up for mass rallies."

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