Traverse City Record-Eagle

Michigan

April 5, 2012

Detroit appears to dodge state takeover

THE ASSOCIATED PRESS Associated Press

DETROIT — Detroit's City Council and a state-appointed review team reached an agreement Wednesday aimed at fixing Detroit's broken finances and avoiding the appointment of an emergency manager who would have been armed with sweeping powers to take control of the cash-strapped city.

Gov. Rick Snyder had given city officials until today to sign off on the agreement before deciding whether he would appoint someone to take over. Mayor Dave Bing was expected to sign the deal, although he was readmitted to a hospital Wednesday as a precaution because of discomfort following surgery to correct a perforated colon.

Under terms of the deal approved by the council on a 5-4 vote, Bing and the council would maintain authority over the city's finances and budget but would be required to renegotiate recently ratified union contracts and share decision-making with a newly hired project manager and chief financial officer. A nine-member board would monitor the city's fiscal restructuring.

"The council has acted responsibly to put Detroit on the path to financial stability," Snyder said in a statement. "We all want Detroit to succeed ... While the council's action is a positive step, there's no doubt that much work remains. The magnitude of the city's financial challenges means that many difficult decisions lie ahead. We must build on this spirit of cooperation and be willing to act in the city's long-term interests."

The Detroit case is the highest-profile yet involving a controversial year-old Michigan law that gives the state more power to intervene in financially troubled cities and school systems. Emergency managers have the power to toss out union contracts and strip locally elected leaders of authority. A petition drive aimed at overturning the Michigan law is trying to qualify for the November ballot.

Detroit faces a $200 million deficit and $13.2 billion in long-term structural debt. Council recently approved the sale of $137 million in bonds to help solve Detroit's immediate cash flow issues and avoid possible payless paydays.

The agreement follows days of feverish negotiations between the city, council members and state Treasurer Andy Dillon.

Up until the weekend, first-term Councilman Andre Spivey had been leaning toward voting in favor of the measure. On Wednesday, he voted against it.

"There is no financial support attached," he said after the vote. "I'm also concerned about the possible power and authority of a project manager. We won't know six to nine months to a year (how it will work) ... but it's here now and we must work with it."

Council members last week discussed Snyder's proposal and spent the weekend reviewing it. Some blasted a portion of the document that tossed out concessions on pay, health benefits and pensions recently reached between Bing and city unions.

Snyder has said those concessions don't go far enough help solve the city's fiscal challenges.

The agreement calls for the mayor to not "execute" and the council to "not approve" any changes to current collective bargaining agreements.

Bing had used the threat of an emergency manager to get the unions to come to the table. Under Public Act 4, an emergency manager would have the authority to rip up and renegotiate union contracts.

City union leaders and workers last week and on Monday urged the council not to vote on Snyder's proposal.

"We asked the unions to come to the table ... the city turned our backs on them," Spivey said.

Those on the council, who appeared openly to support the agreement, were threatened with opposition at election time by a host of city workers and residents during public comment sessions during the meeting.

Council President Pro Tem Gary Brown told reporters after voting in favor of the deal that the agreement will help Detroit become a thriving city again.

"But make no mistake about it, the work begins today," he said. "Now we have oversight with real teeth that will insure that city services get reshaped so that the citizens get the services they deserve."

However, some still believe they have been sold out by those they put in office.

"This vote was horrible. Who gives away control?" said Cecily McClellan, who works in the Detroit Human Services department. "They have the authority to union bust. This has been a steadfast dismantling of the city and this is the final straw."

AP-WF-04-05-12 0011GMT

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