CHICAGO — The historic consent decree between Detroit and Michigan offers a good start for the struggling city to address its fiscal problems, but implementing the agreement could be tough, Fitch Ratings said in a release Wednesday.
“While we believe these additional resources and support from the state treasurer can be of great benefit in moving the city towards fiscal stability, they create potential for discord and more cumbersome decision-making if the parties are not in agreement on key issues,” Fitch analysts said in the brief report, titled “Detroit’s Consent Agreement, Budget Need Sustainability.”
Fitch notes that the state and city are still in the process of assembling the nine-member financial review board that will oversee the city’s finances and that the mayor has not yet named a new chief financial officer or program manager, both important positions created under the agreement.
“We also expect continued resistance among unions to the FSA, given the constraints it imposes on collective bargaining,” Fitch said.
An effort to overturn the state’s emergency management law also threatens the agreement’s relevance, Fitch said.
In related news, Gov. Rick Snyder said Wednesday that the agreement is meant to create a formal supporting role for the state but that Detroit still needs to take the lead when it comes to tackling its problems.
“We’re there to support the city of Detroit but they need to take the primary steps,” Snyder said during a town hall meeting where an audience member asked about improving the problem-plagued Detroit Department of Transportation.
Snyder talked about a range of topics at the town hall meeting, including a controversial plan to build a new bond-financed bridge to Canada and a plan to eliminate or trim the personal property tax.
“We’re going to build that bridge yet,” Snyder said. “A lot of our job opportunities in the future are tied to that corridor.”
Asked about his plan to eliminate the personal property tax, Snyder said he wants local governments, who will bear the brunt of the loss, to come forward with a comprehensive plan to replace revenue.