DETROIT (WWJ/AP) – A long-awaited review of Detroit’s finances and fiscal future is due Feb. 19, but it could reach Gov. Rick Snyder within a couple of weeks or sooner.
When Snyder receives it, it likely won’t take the Republican governor too long to decide whether the troubled city should be placed under state oversight and saddled with an emergency manager, he told reporters Monday following a Detroit Regional Chamber of Commerce event in Detroit.
He added that a short list of potential candidates for the manager’s job is being compiled.
“I wouldn’t expect it to take a significant amount of time,” Snyder said of a decision on an emergency manager. “Usually I’m pretty good about doing my homework and studying things, so I’ll jump on this fairly quickly.”
Detroit is billions of dollars in debt and has a budget deficit topping $300 million. In recent months, the city has had trouble with cash flow and has been relying on bond money from a state-held escrow account to help pay its bills.
The review team, led by state Treasurer Andy Dillon, was appointed in December. A preliminary financial review determined then that Detroit was not on target to fulfill promises made to the state that allowed it to avoid an emergency manager.
A declaration of a financial emergency would allow Snyder to move forward with the emergency manager process. Emergency managers have the power under state law to develop financial plans, renegotiate labor contracts, revise and approve budgets to help control spending, sell off city assets not restricted by charter and suspend the salaries of elected officials.
Detroit has a budget deficit of more than $300 million and has struggled with sustaining cash flow in recent months.
During a meeting of the Detroit Financial Advisory Board on Monday, the city’s CFO Jack Martin said the city’s cash flow crisis has improved, supplying a 60-day report card of cost cutting efforts that have trimmed $97 million out of the current fiscal year budget.
“So we don’t expect to run out of money in April,” Martin told WWJ Newsradio 950′s Jon Hewitt. “We bought enough time to take us, we believe, through June 30th into July of next year.”
Martin said that included deferral money — $29 million of which are pension commitments to city retirees that the city will still have to find a way to find money to pay at some point.
Detroit’s property and business tax base has been on the decline for years, as about a quarter-million people have left the city since 2000 – dropping its population to about 700,000.
Five Michigan cities and three public school districts – including Detroit Public Schools – currently have emergency managers.
“I believe an emergency manager is probable,” said Terry Conley, a partner in a major suburban Detroit auditing firm, Grant Thornton LLP. “Focusing on the city’s long-term debt is critical. If we don’t have a couple of good years, then five, seven, eight years out we’ll be back at the same problem.”
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