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Detroit wasting time, energy looking to Lansing for cash

DETROIT – Detroit City Council Member JoAnn Watson, others on City Council and even Detroit Mayor Dave Bing continue to maintain the state owes the city enough money to cancel out its debt for this year. They will happily tell you were the state to simply pay roughly a quarter of a billion dollars owed in a 13-year-old tax deal [struck between then Michigan Gov. John Engler and then Detroit Mayor Dennis Archer] no one would be looking at putting an emergency manager in place inside Detroit City Hall.

State Treasurer Andy Dillon on Tuesday made remarks in a radio interview on Inside Detroit with host Mildred Gaddis that acknowledged the state in fact did renege on the deal.

Here is what he said: "I agree that the deal reached back in 1997 that said to Detroit if you cut your income tax we promised we would line up a revenue sharing number it totals up to $270 million a year and if you add up the shortfall and the state failed to live up to that 10 year deal and you add up the lost revenue sharing it totals up to $224 million. So we don't deny that deal was not kept."

That is a position few in Detroit remember hearing including us at Local 4; although the Treasurer's office maintained Wednesday it has been the treasurer's mantra since he took office, and the office's position during the last couple of years of the Granholm administration as well. It should be noted the deal was broken during her administration and the legislature during that time changed revenue sharing law that rendered the deal moot anyway.

The treasurer went on in that interview to make the point that the notion the state owes Detroit money now is largely immaterial; mainly because that's not the real problem. He told Gaddis, "$200 million, much of it would help the city get through the year. It won't solve the long term problems the city's facing which is over $12 billion in liabilities that they have on their balance sheet… so while that would be nice, it would get us through this year and probably next year it won't solve the systematic structural problems the city has."

He did not address whether the state is looking at paying the back revenue sharing, but his office told me in no uncertain terms today there is no move afoot to do so and there never has been.

In fact, the governor's office told me the exact same thing. If anyone has any hope of the state of Michigan ponying up a quarter of a billion dollars that could bail out Detroit for the year, think again.

The governor's spokesperson, Sarah Wurfel, sent me the following information regarding the highly disputed revenue sharing deal's inner workings: "This is not the Governor's to decide. The $220M in revenue sharing that the city talks about was something that was 13 years ago (from 1998) over two past administrations and multiple legislatures. Gov. Snyder can't look backward, only forward. He's focused on how to best help the city of Detroit move forward in tough economic times."

The clarification goes on to gently tell those in the city of Detroit who keep banging this drum they have no claim to the money now and makes it abundantly clear there is no money to be had because the city of Detroit has already received commensurate financial help:

"It's also important to note other efforts that have helped the city financially and that offset revenue loss. A few important examples of this support from Gov. Snyder and legislators just this year are: 

· Signed into law provisions that continue both the city's income and utility taxes that add up to more than $164 million annually.

 · Signed into law a supplemental appropriation of more than $10 million in Constitutional revenue sharing to help protect Detroit due to the dramatic drop in population from the 2010Census."

No doubt this does little to make Detroiters who feel the entire emergency manager process is a fraud [and they are many] feel better.

In the end, the treasurer's remarks about this not solving the City's problems is in fact the real point. It is looking as if a $2 billion unfunded pension shortfall is what is likely to take the City down into minimally a consent decree.

But all of those passing out petitions to try and prevent the Emergency Manager from ever getting into place at the Coleman A. Young Municipal Center, fueled by anger the state renegged on a deal, need to know that even if they succeed, their fate could be far worse. emergency managers can not fix unfunded pensions. Federal law requires payment and only a Chapter 9 Municipal Bankruptcy can solve that.

So, it's time to stop decrying lost revenue sharing for good and start thinking about how to prevent a Chapter 9 filing.


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