CHICAGO — Michigan Gov. Rick Snyder Thursday declared fiscal emergencies in a pair of Detroit suburbs, the first step toward a state takeover or declaration of bankruptcy.
Snyder's announcement came less than a week after state Treasurer Kevin Clinton said two state review teams had found fiscal emergencies in Royal Oak Township and Highland Park. Snyder had 10 days to review the investigations.
Local officials now have seven days to request a hearing before the treasurer to appeal the finding.
Hearings, if requested, will be held on Feb. 11 in Lansing.
After that, Snyder would either confirm or revoke his determination.
An affirmation will launch a series of steps under the state's emergency management law that allows local officials to opt for four choices: entering into a consent agreement with the state; asking for an emergency manager to take over the city; asking for a neutral evaluator; or asking for permission to file Chapter 9.
Highland Park, which is located in Wayne County, has been under state control before and the Highland Park School District is already under emergency management.
Royal Oak Township is located in triple-A rated Oakland County.
The Royal Oak team found that, among other things, audit reports for the last three years showed variances between revenues and expenditures, with actual general fund revenues coming in short for two of the three years. Township officials also failed to adopt a budget for the current fiscal year that began on Jan. 1, 2014, according to the treasury department.
Highland Park saw a 126% increase in the negative fund balance in its water and sewer fund in 2013, while officials have been unable to issue timely or accurate water and sewer bills, the state said. As of the end of October 2013, the city owed about $19.5 million to various vendors, including $101,000 to the state of Michigan for principal and interest on outstanding emergency loans.
The review teams were appointed Dec. 3, after a preliminary analysis showed that "probable financial stress" existed in each community.
