CHICAGO — Another Detroit suburb faces a state takeover.
After two months of investigation, a review team assembled by Michigan Gov. Rick Snyder said April 4 that it found a financial emergency in the city of Lincoln Park. It's the first step toward a possible state takeover. The team sent the report to Snyder.
Located outside Detroit in Wayne County, Lincoln Park has suffered steep drops in property tax revenues over the past few years. The city has seen its taxable value fall 31% over the last four years, and its general fund revenue decline to $20.3 million in 2013 from $24.6 million in 2009, according to the state.
Property taxes make up 60% of the city's general fund revenue. A state board in January found that the city faces "probable fiscal stress."
The review team said it found a trend of over-spending from the general fund, and the fund's ending balance fell from $4.5 million in 2010 to negative $90,000 as of June, 30, 2013.
"City officials indicated that the general fund deficit will likely increase by an additional $1 million during the current fiscal year," the team said in a report released by the Michigan Department of Treasury. "City officials indicated this estimate to be a best-case scenario, assuming the city will receive additional concessions from its police unions."
Snyder has 10 days to consider the report and reach a decision. If he determines that there is a financial emergency, the city has four options: sign a consent decree with the state; ask for an emergency manager; ask for a neutral evaluation; or seek to file Chapter 9, with the governor's permission.
Snyder in late March declared a fiscal emergency in the Detroit suburb of Royal Oak Township. He also declared one in Highland Park. The state controls Detroit, Allen Park, Flint, Hamtramck and Pontiac, all located in the Detroit metro area, as well as several school districts.
