CHICAGO - Ramona Henderson Pearson, the financial manager for Highland Park, Mich., this week made a public plea for the state to allow the city to issue bonds to help fix a still looming deficit of about $6.5 million.
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Pearson presented the request, along with her fiscal recovery plan for the city, at a news conference Wednesday. The state learned of the plan at the same time, said Terry Stanton, a spokesman for the Michigan's Treasury Department.
Pearson asked that the state approve an amendment to the Local Government Fiscal Responsibility Act to allow for the city to go beyond its maximum tax levy to issue debt, but Stanton said that would require a vote by the legislature. Currently, the law says the levy cannot be more than 3% of the assessed valuation of the local government's property.
"That would take legislative action," Stanton said. "It would change the statute."
Though the state will review the recovery plan and make recommendations to the Emergency Loan Board, which appoints the financial manager, the city already has "very large debt," Stanton said.
Pearson also wants to contract with the state police for law enforcement in Highland Park. That request was denied outright, Stanton said.
"We've made it very clear that the department of the state police is not an option," Stanton said. Last year, Pearson requested that the National Guard be allowed to police the city. Stanton said the state has suggested the city work with Wayne County to allow the sheriff's office to police the city.
Pearson, who was appointed by the state, and Gov. John Engler both have made announcements in public about policy regarding Highland Park without notifying the other. Engler announced last year that he wanted to merge the city government and the schools in Highland Park. No legislation has been introduced to do so.
Michigan appears to be sending a message that it will not bail out cities, according to one market participant. Conversely, Pearson appears to be pressuring the state by making her requests by way of press conferences, the source said.
Last year, State Sen. Martha Scott, D-Highland Park, introduced an amendment to allow for $5 million in aid for the city. The measure failed.
Investors would likely be leery of buying bonds issued by Highland Park when it appears that the city is mismanaged, the source added.
"She was placed in Highland Park to right the ship," Stanton said. Pearson, who had not returned phone calls by press time, has made her frustration with the job known publicly.
