State of Michigan's oversight of Detroit finances ends 5 years after bankruptcy filing
Financial Review Commission votes to end state's oversight of Detroit finances
DETROIT – A panel voted Monday to end the state of Michigan's financial oversight of Detroit.
The city of Detroit filed for bankruptcy nearly five years ago. Exiting that municipal bankruptcy included state oversight of city finances.
Now that the city has posted three consecutive budget surpluses the state Financial Review Commission voted to end the oversight.
Ten consecutive years of waivers would lead to the commission dissolving.
Detroit filed for Chapter 9 bankruptcy on July 18, 2013 and started exiting bankruptcy in November 2014. It was the largest public bankruptcy filing in U.S. history. Exiting bankruptcy launched the city into a turnaround that required discipline after years of corruption, budget-busting debt and an exodus of residents.
Detroit cut the pensions of general retirees by 4.5 percent, erasing $7 billion of debt and promised to spend $1.7 billion to demolish scores of dead buildings, improve public safety and upgrade basic services, among other key steps.
The city's bankruptcy case concluded in just less than 16 months, lightning speed by bankruptcy standards. The success was largely due to a series of deals between Detroit and major creditors, especially retirees who agreed to accept smaller pension checks after the judge said they had no protection under the Michigan Constitution.
It took more than two years for a smaller city, Stockton, California, to get out of bankruptcy. San Bernardino, a California city even smaller than Stockton, still is operating under Chapter 9 protection more than two years after filing.
The State Financial Review Commission (FRC) voted unanimously to end active oversight after the City delivered the third consecutive audited balanced budget. For the first time since 1977, the City will be in complete control of all government functions. pic.twitter.com/ZiOJ08Ss19— City of Detroit (@CityofDetroit) April 30, 2018
Detroit mayor's 2018 budget plan
In February, Mayor Mike Duggan presented a budget to the Detroit City Council that is just more than $2 billion. The budget allowed the city to stay out of the red and remain in the positive for the third consecutive year.
Duggan said at the time he believed that if the budget were approved it could eliminate state review. The budget adds $10 million to the Detroit Public Works to manage road funding and $8 million to the Detroit Police Department to hire approximately 141 new full-time positions. Additionally, the budget adds $100 million to blight remediation and capital projects.
"We're proposing to double the rate of commercial demolition. This is the program that's running best in Detroit," Duggan said. "It's remarkable how they're doing."
The $100 million for blight is double the amount allocated from the last fiscal year and Duggan believes it's a necessity that guarantees every neighborhood gets transformed.
"We believe by 2019, we can get rid of every unsalvagable vacant commercial building on a main street in the city of Detroit," Duggan said.
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