DETROIT – Michigan Gov. Rick Snyder's office said it is scheduled to begin conducting a financial review of the city of Detroit..
The review is the first step in a process that could result in the state appointing a financial manager for the city.
State Treasurer Andy Dillon announced Friday that the preliminary review will begin Tuesday and run "parallel to the city's continuing effort to address its financial problems."
"While we have long hoped the Mayor and city council would agree on a viable recovery plan, given the mayor's description of the city's financial condition and the prospect the city may run out of cash in mere months, it has become clear that a preliminary financial review is not only warranted but necessary," Dillon said in a news release. "We must begin the review process, in the event the city does not develop a workable plan. The longer we wait to address Detroit's financial problems, the more painful the eventual solutions become."
Detroit has an accumulated deficit of about $150 million and faces a $45 million cash shortfall.
The state said a preliminary financial review does not automatically mean that a financial emergency will be declared or an emergency manager will be appointed. A preliminary review provides a deeper, more accurate picture of Detroit's finances and allows the state to be prepared if the city does not develop a viable recovery plan. the state said.
"As Gov. Snyder has indicated on numerous occasions, a financially stable Detroit is critical to the reinvention of Michigan," Dillon said. "We have spent months working with the city in hopes of addressing its financial difficulties, but time is now of the essence."
Detroit Mayor Dave Bing released a statement following the state's announcement that the review would begin soon.
"While unfortunate, this decision by Gov. Snyder is not unexpected," Bing said. "We believe we have the right plan to address the city's fiscal crisis and we will continue to work with City Council, our unions and other stakeholders to achieve the necessary cuts and concessions, including pension, healthcare and work rule reform. I'm confident with yesterday's demonstration of solidarity and shared commitment that we will continue to make progress. We are committed to full cooperation with the Governor's fiscal team, who has had full access to the City's financial information and plan for months."