FOXNews.com: Michigan governor may declare Detroit fiscal emergency Friday

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Michigan governor may declare Detroit fiscal emergency Friday Mar 1st 2013, 05:51 DETROIT –  Gov. Rick Snyder plans to announce Friday whether he will appoint an emergency manager for Detroit but likely won't immediately name the person if he does, Mayor Dave Bing said. Bing, who spoke with Snyder by phone earlier in the day, signaled the Republican governor had decided to take the extraordinary step of choosing an independent overseer to confront the city's $327 million budget deficit and $14 billion in long-term debt. He stopped short of confirming the decision, saying the announcement was Snyder's to make. "Everybody's got a pretty good idea of what the announcement will be," Bing said. Speaking briefly to reporters Thursday afternoon from Lansing, Snyder only said that no specific individual would be announced during a forum he scheduled for mid-day Friday to discuss the city's financial situation. If he agrees that a financial emergency exists, which he is expected to do, there would be an appeals process, he said. "There's a 10-day appeals period," he said. "There's potentially a hearing. Then after that, I would need to reaffirm my decision or change my decision. Depending on if I reaffirm my decision then it could lead to an emergency manager announcement." Emergency managers have the power under state law to develop financial plans, renegotiate labor contracts, revise and approve budgets to help control spending, sell off city assets not restricted by charter and suspend the salaries of elected officials. A state-appointed review team made public on Feb. 19 its determination that Detroit is in a financial emergency and submitted its report to Snyder. The team found that "no satisfactory plan exists to resolve a serious financial problem" in the city, leaving Snyder to mull over whether to appoint a manager. Bing said Thursday he has believed since taking office that some kind of outside help is needed to address the city's finances, though he doesn't support the appointment of an emergency manager. "I'm more interested, instead of fighting Lansing, in working with them," the first-term mayor said. The financial review team's report given to Snyder said the accumulated deficit as of June 30, 2012, would have topped $900 million if Detroit leaders in recent years had not issued bonds to pay some of its bills. Long-term liabilities, including underfunded pensions, total more than $14 billion, and in recent months the city has relied on bond money from an escrow account to meet its dwindling cash flow needs and to pay city workers. The review team also said that because of its cash deficit, the city would have to either increase revenues or decrease expenditures, or both, by about $15 million per month between January and March to "remain financially viable." "The case is all about the numbers," Bing said of Snyder's expected decision to name an emergency manager for Detroit. "Anybody who's been following the numbers in Detroit knows that the numbers aren't good and they're not going to change dramatically any time soon. There are things Lansing can do to help to get us out of this situation faster than we can do it by ourselves." Snyder has described the fiscal predicament in the state's largest city as "quite dire" but "solvable," if the city works with the state and an emergency manager if one is appointed. If a manager is appointed over Detroit's finances, that person will have to hit the ground running, said Patrick O'Keefe, president of O'Keefe and Associates, a turnaround consulting firm north of Detroit in Bloomfield Hills. "Time is not your friend in these situations," O'Keefe said. "The emergency manager, he's an army of one. He's going to have to assemble a team to help him consult and deal with all the issues the city has. If they get the right person, things will happen fast. If you get somebody with understanding and expertise in restructuring, I think within 90 days they'll have a plan." A Detroit emergency manager's race may be just as important as his or her resume, said Bill Brandt, chief executive of Development Specialists, Inc., a national turnaround firm. "Snyder's been building political cover for two weeks to do this. Now it's going to happen," Brandt said Thursday. "If they don't appoint an African American to do this it will be a horribly wrong decision politically and probably do nothing but exasperate many old wounds in Detroit. It will be seen as a cavalier slap in the face for people in Detroit." More than 80 percent of the just over 700,000 people living in Detroit are black. All nine members of the City Council are black. The last time Detroit had a white mayor was prior to 1973 when Coleman A. Young was elected the city's first black mayor. The city and its mostly white suburbs have shared an often racially strained relationship. A 1967 race riot spurred a faster exodus of white residents and white businesses from the city to the suburbs. A stricter consent agreement would be preferable to state oversight, Council President Pro Tem Gary Brown said Friday. "I think the mayor should push very hard for a new consent agreement with some very strong milestones that every 30 days have to be achieved," Brown said. "And as long as the mayor and the council are making progress in meeting those milestones then we should be allowed to continue to make progress. And if we're not making progress you can always pull the trigger." But the state complained that the city failed to meet some deadlines under a consent deal approved last spring. That led to a preliminary review of the city's finances in December that eventually found a serious financial problem existed in Detroit. The review team was appointed to take a deeper look at the city's books.

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