Detroit likely gets emergency financial manager by early 2013

State treasurer not ruling out emergency financial manger in Detroit, likely to happen in early 2013

By Rod Meloni - Reporter, CFP ®


Michigan Treasurer Andy Dillon spent much of Tuesday with the Detroit mayor's office and Wednesday morning with individual City Council members at City Hall.

Dillon told members, ever-so gently, their time has run out.

Related: Michigan leaders craft emergency manager alternative

"Today has been very sobering, I will say," said City Council President Charles Pugh.

City Council President Pro-Tem Gary Brown said the state has lost its patience with Detroit leaders while the city sits $200 million in debt.

Read more: State treasurer's office: Emergency financial manager still option for Detroit

"We're burning cash at a rate that the state is uncomfortable with," said Brown. "We're all uncomfortable with it, that if we continue to do that it's going to drive us into bankruptcy and the state is not going to allow the city to go into bankruptcy. They're going to step in."

Steps for getting emergency financial manger in Detroit

The process of bringing in an emergency financial manager has not officially started, but here's how it will play out:

Under Public Act 72, the state of Michigan would start what is called a preliminary review period that lasts up to 30 days. If it finds a "serious financial problem" the governor will appoint a review team which gets between 30 and 90 days to decide whether an emergency financial manager is needed in the city.

The governor then can declare a financial emergency and refer the decision to the emergency loan board to appoint an emergency financial manager.

Pugh offered what he hopes are calming words for what are sure to be a contentious few months.

"If indeed we are moving toward something that is an emergency financial manager, I want it to be known that Detroit is still open for business and life still will go on, although the city government will look a lot different," he said. "But, you know, the city is not the government."

Mayor Dave Bing's office released a statement Wednesday afternoon.

"My administration has had discussions with the state regarding an emergency financial manager previously. Until the State makes a final determination, I will continue to implement my restructuring plan on behalf of the citizens of Detroit."

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