Detroit is one step closer to being appointed an emergency financial manager (EFM) by the state, according to the Detroit News. State Treasurer Andy Dillon on Wednesday said that the preliminary review of the city's finances had revealed "probable financial stress," and recommended that the state send in a team to conduct a formal financial review.
What happens now that the preliminary review has been completed?
A rating of "probable financial stress" paves the way for a more detailed and formal review. That review must be approved by Gov. Rick Snyder before the team can be assembled and the review process can proceed.
Does this raise the likelihood that Detroit will be appointed an emergency financial manager?
The appointment of a formal financial review team to sift through the city's books is the second step in the emergency financial manager process. As such, the fact that the process is continuing forward does theoretically increase the likelihood that Detroit will get an EFM.
What was Detroit Mayor Dave Bing's reaction?
Bing released a short formal statement on Wednesday, which was printed in its entirety in the Detroit Free Press. In the statement he maintained that nothing that the preliminary review had discovered was news to the city or to the state itself, and that the recommendation to move forward with the EFM process was not a surprise. He also said that he believes that his previously-disclosed proposals aimed at reducing the city's deficit remain the best course of action for Detroit.
What did state Treasurer Andy Dillon have to say about the report's findings?
Dillon and the Treasury Department issued a formal statement of their own on Wednesday, also in the Detroit Free Press, in which he released the summary of the report's findings. The report found that Detroit's current state of "probable financial stress" was the result of "the inability of the City to avoid fund deficits, recurrent accumulated deficit spending, severe projected cash flow shortages resulting in an improper reliance on inter-fund and external borrowing," and a host of other financial issues.
What happens after the financial review team finishes its report?
The formal financial review team appointed by Gov. Snyder will have up to 60 days to conduct their review, although it is likely that the state will wish to make the process resemble that of nearby Flint, which was completed in 30 days. The team can make recommendations based upon their findings at that time, which can include an EFM but also could entail a consent agreement. A consent agreement would mean that Mayor Bing would be given some of the powers of an EFM, but not all, and the city would remain under its own governance. Gov. Snyder himself still favors a consent agreement, as reiterated by his spokeswoman Geralyn Lasher, in statements to the Detroit News and other media outlets on Wednesday.
Vanessa Evans is a musician and freelance writer based in Michigan, with a lifelong interest in politics and public issues.
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