Is emergency financial manger inevitable for Detroit?

Detroit likely gets emergency financial manager by end of January

By Rod Meloni - Reporter, CFP ®

DETROIT - The clock is ticking as Detroit's financial review started Wednesday morning with a conference call between the state of Michigan and the newly-appointed financial review team.

Meanwhile, Mayor Dave Bing is making one last-ditch effort to raise cash to keep the city from falling under state control. Bing wants to sell impounded vehicles for scrap and collect delinquent taxes to quickly raise cash the city desperately needs.

Read more: Detroit mayor says he has plans to save city millions

"We already collected over $10 million year to to date, and I think we're going to reach that number of $50 million," the mayor said.

Why $50 million? State Treasurer Andy Dillon knows why. He told Bing all about it last week.

"I said, 'You have to find $30-$40 million in a short period of time so that we can have confidence it's going to materialize to avoid, I think, that outcome," Dillon said.

Rod Meloni: Detroit EFM? Going through the motions

That outcome is an emergency financial manager. A financial review can go 90 days but Dillon expects it to take about 30. Should the new review team, which is comprised largely of the city's Financial Advisory Board, decide a financial emergency exists then it is up to the governor to decide whether he will appoint an emergency financial manager.

That could come before the end of January. The state is already reviewing candidates for the position. Should the governor appoint an emergency financial manager the Detroit City Council likely will dissolve. It's Bing who will stay.

Read more: Governor appoints financial review team for Detroit

"If you look at Flint and Pontiac, managers in both those cities invited the mayor back in to be part of the solution for those cities. Really, they are healthy relationships there," said Dillon.

Gov. Rick Snyder said the focus should be on making the city of Detroit better.

"The answer is not stability. The answer is we have to grow the city of Detroit," said Snyder. "We have to get to stability. We have to get better services for the citizens and fundamentally get this on a trajectory of growth."

The state's new emergency manager law goes into effect in April. At that point, Dillon says for those who remain with the city of Detroit they will keep the position they have at the time the new law takes effect.

Read more: Michigan Senate to take up new emergency manager law

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