CHICAGO — Michigan Gov. Rick Snyder has named the six-member team charged with reviewing Detroit's battered finances in a process that could eventually lead to the appointment of a financial manager.
The team's appointment late Tuesday follows the Department of Treasury's finding last week that the city faces a "serious financial problem" after a preliminary fiscal review ordered by the state. The process for such a review is laid out in the Local Government Fiscal Responsibility Act of 1990. Voters in November repealed a more recent emergency management law.
Treasury based its findings on the city's violation of rules which require amending budgets to avoid deficit spending. The city faces a cash flow crisis at the close of its fiscal year in June and fiscal reporting problems made it difficult to gauge the extent of the city's fiscal woes with monthly changes in projections, Treasury said.
In August, the city projected a cash deficit of $62 million by June 30 but those numbers more recently have jumped to $122 million and the city has not filed "an adequate" deficit elimination plan, officials added.
"Given the financial crisis that continues to grip the city of Detroit, we must move quickly to ensure city residents have continued access to essential services they expect and deserve. Therefore, I am requesting that this team conduct an expedited review of the city's finances," Snyder said in a statement.
The team includes State Treasurer Andy Dillon; Auditor General Thomas McTavish; Ken Whippel, chairman of the board of Korn/Ferry Int.; Darrell Burks, senior partner at PricewaterhouseCoopers; Ronald Goldsberry, consultant, Deloitte Consulting; and Frederick Headen, legal advisor for the Michigan Department of Treasury.
The team has 60 days to complete its examination, although it can request a 30-day extension.
It must decide if: a serious financial problem does not exist; a serious financial problem exists but a consent agreement to resolve the problem has been adopted; or that a local government financial emergency exists because no satisfactory plan exists to resolve the problem. Based on the findings, Snyder could appoint a financial manager with authority to dramatically impact city spending and operations.
Mayor Dave Bing and his finance team on Wednesday announced measures aimed at raising $50 million in revenue by cracking down on unpaid tax collections, fees and other debts along with selling off unused properties.