Detroit’s troubled finances

The state's preliminary review has revealed "probable financial stress" in Detroit, but Michigan Treasurer Andy Dillon says city leaders still have the chance to resolve the crisis and avoid an emergency manager.


"It does appear they are making significant progress in their discussions with labor," Dillon said today during a conference call with reporters.


"City Council and the mayor seem to be on the same page. So we remain optimistic that the city can solve this situation on its own."


Dillon delivered a report to Michigan Gov. Rick Snyder this morning outlining the findings of the treasury's preliminary review and recommending appointment of a formal review team.


Game's over, the well is dry. No amount of stonewalling on labor concessions will save a job or ease the pain from the coming restructuring -- a job that will either be done by Detroit's elected leaders acting in concert with unions and the state, or by an emergency manager, or by a bankruptcy judge.


As State Treasurer Andy Dillon starkly spelled out Wednesday in his preliminary assessment, Detroit is in dire straits and the crisis is escalating with each passing day.


The next step is appointment by Snyder of a financial review team, which I'm told will likely consist of seven to nine people, some with expertise in finance and management, from in and around Detroit. Those selections are being vetted now and will be announced in a few days.


Dillon said he and the governor remain hopeful that Detroit officials will come up with a way out of the financial mess on their own. He cited the new spirit of cooperation between the mayor, city council and city unions to take the steps needed to avoid a financial meltdown.


“There is real progress,” Dillon said during a conference call with reporters. “Everyone is willing to look at every possible solution.”


He added he expects that the formal review process “will begin in earnest” early next month and run in tandem with Detroit officials’ efforts to find their own solution.


“We’re very focused on the date when we think they run short of cash, since that affects our timeline,” the state treasurer said. “We’re watching that very, very closely.”


If the new review finds the city is under severe financial stress, city officials might be able to stave off a financial manager by adopting and agreeing to strictly follow a consent decree righting Detroit’s finances. Such an agreement is likely to include painful remedies for elected officials, city workers and city services, but would avoid handing control of the city to an emergency manager.


Dillon expects to send Snyder this week a list of possible review team appointees that will include residents of Detroit, a majority black city that already has an emergency manager overseeing its public schools.


A statewide petition drive is under way to let voters weigh in on the emergency manager law next November. If the drive is successful, the status of the law may be in limbo until the election.