DALLAS—A state oversight board is restoring some executive powers to Pontiac, Mich., moving the city closer to independence after seven years of state control.
On Thursday, members of Pontiac's receivership transition advisory board voted unanimously to relax state oversight by restoring executive powers to the city's mayor and city council, and state treasurer Nick Khouri signed off on the amendments to the existing emergency manager orders.
The amendments give the Pontiac's mayor and city council authority to conduct city business as outlined in the City Charter.
"This is an important day for the people of Pontiac," Gov. Rick Snyder said. "Thanks to the significant progress city leaders have made by working with the RTAB, this is an appropriate time for the mayor and city council to assume greater responsibility for day-to-day operations. I am certain they will work diligently to ensure Pontiac remains on solid financial footing in the years ahead, which means more success for the city and its residents."
The city, which entered state-controlled emergency management since 2009, began transitioning to local control in 2013 when it transferred to state oversight under a consent agreement.
Under the consent agreement, day-to-day administrative responsibilities have been managed by state appointed city administrator Joe Sabota who reported directly to the advisory board, also appointed by Snyder.
Sabota will step down immediately but the city must still seek RTAB approval for: on-going litigation, issuing debt, contracts of $500,000 or more and any changes to collective bargaining contracts and pension/health care changes. The board is authorized under Michigan's law for distressed local governments and exits to smooth the transition out of state control.
Pontiac’s three emergency managers paid off $87 million in debt and outsourced or privatized nearly every service, including police and fire protection, now provided through the Oakland County Sheriff’s Office and the Waterford Township Fire Department.
The last EM, Louis "Bud" Schimmel took over as manager in late 2011 and implemented an aggressive plan of privatization and cuts. He sold the city's sewage system to Oakland County for $55 million, using the cash to pay off nearly all of its bond debt and erase a $9.2 million structural deficit.
Schimmel outsourced nearly all city services, including police and fire. He cut the number of city employees to 20, not including the court system, from more than 1,000 in 2009, and cut the budget in half, down to $28 million. His last goal was accomplished in August 2013 when a state board approved his plan to suspend retiree health care payments while increasing monthly pension payments to retirees by $400 to offset the loss.
The city now has a budget surplus of $10 million, according to financial statements for the year ended June 30, 2015.
