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Detroit review team affirms financial emergency, but still no clear path forward

The state review team investigating Detroit’s finances met for what was supposed to be the last time Monday.

They reaffirmed that Detroit is in “severe financial stress” during a raucous meeting that veered into chaos at times.

Protesters, angry at what many call an unconstitutional hostile takeover of the city, mostly shouted over team members as they tried to deliberate.

The review team, led by State Treasurer Andy Dillon, mostly sat silent as protesters sang “We Shall Overcome,” yelled “Shame on you!,” and occasionally used racially charged rhetoric. One man said people would “burn the city down” before allowing the state to take it over.

During an interview after the review team met, Governor Rick Snyder insisted he’s trying to work with the city, not take it over. 

“I mean when you talk about these meetings you’re obviously going to get some upset people coming," Snyder said, "I don’t think that necessarily reflects the 714,000 citizens of Detroit.”

Snyder says he’s tried to be proactive about getting the facts out to the public. He points out he’ll available to talk to residents at a town hall meeting in Detroit Wednesday.

And in the end, the review could only declare that Detroit is in a financial emergency—and that no consent agreement yet exists to help the city avoid an emergency manager.

Dillon says that leaves Governor Snyder with two choices.

“Ten days from today, the Governor has to make a judgment,” Dillon said. “He can accept the recommendation of the review team, or he can reject it.”

The review did recommend, informally, that a consent agreement is the “preferred course of action.” The Governor says he believes the state and city officials are “very close” to some kind of “financial stability agreement.” 

Snyder said "we're moving in a direction where you would hope reasonable people” would come to an agreement over how to improve the city’s finances.

“So [we want] to take this financial stability agreement and enhance it, so that it could also qualify as a consent agreement. So it would meet the requirements for Public Act 4,” Snyder said Monday. “But it would really be this financial stability agreement going forward about how we could work the city as partners.”

Dillon and other state officials say such language is necessary to make sure the city follows through on its promises to make sweeping reforms—and, Dillon acknowledged, to make sure there’s a way to make sure city unions make big concessions.

A large coalition of civilian unions ratified a new contract last week, and Mayor Dave Bing reached a similar tentative agreement with police and firefighters that has yet to be ratified. But those agreements “don’t work,” Dillon argued.

The Governor says he hopes to reach some kind of agreement this week.

Snyder says the deal could be a consent agreement under the emergency manager law, a more general “financial stability agreement”, or an even more ordinary inter-local agreement.

"It’s really coming up to a mutual agreement. It’s not about spending all the time on the legalities of this but getting people to come together and work together and make the city a better place," Snyder said.

If the two sides can’t do that within the next 10 days, Governor Snyder will be left with little choice but to appoint an emergency manager; something he doesn't want to do for a variety of reasons. 

The legality of Michigan’s emergency manager law is being challenged on a number of fronts.

The emergency manager law is likely to be suspended in the near future. A citizen and labor coalition says they’ve gathered enough petition signatures to put it up for voter referendum in November.

In the meantime, an interesting legal sub-plot is unfolding.

Detroit union activist Robert Davis still wants members of Detroit’s state financial review team to face a contempt of court hearing.

Davis has filed an emergency motion with the Michigan Supreme Court to overturn a state appeals court decision.

The appeals court last week overturned Ingham County Circuit Judge William Collette’s order that barred Detroit and the state from signing a consent agreement before March 29th. That was the date Collette had ordered all review team members in court for a contempt hearing.

The Appeals Court also barred Judge Collette from holding more hearings that could have found review team members in contempt of court for violating the state’s Open Meetings Act.

Drew Paterson, Davis’s attorney, says none of this would be necessary if the state had held open meetings from the beginning.

“They really should’ve, from the get-go, held open meetings so that every gets to know all of the facts, good, bad and indifferent,” Paterson said. “So that there’s no misunderstanding and ability to say they’re hiding things.”

State officials say the review team has complied with the Open Meetings Act after first being ordered to meet publicly.

It’s not clear when the Supreme Court will take up the case.

Lindsey Smith is a Peabody Award-winning journalist currently leading the station's Amplify Team. She previously served as Michigan Public's Morning News Editor, Investigative Reporter and West Michigan Reporter.
Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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