Dec. 21 (Bloomberg) -- Michigan Governor Rick Snyder may appoint a team as early as next week to audit Detroit’s finances and determine whether the state should take control of the city.
A 60-day financial review was recommended today by state Treasurer Andy Dillon after his preliminary review found the city of 714,000 is in “probable financial stress” and may run out of cash by April. Dillon, in a statement, said Detroit has more than $12 billion in long-term liabilities.
Snyder may appoint a four-member group next week or after Jan. 1 to begin a review, the next step toward possible state intervention, said his spokeswoman, Sara Wurfel. Snyder and Dillon met today with Detroit Mayor Dave Bing and told him of the review, she said.
Bing and the City Council haven’t agreed on a plan to reduce the city’s deficit, which may reach $200 million by the end of the fiscal year in June, according to an independent analysis.
Although Snyder saw progress in his meeting with Bing, “we feel we needed to move the process along just in case,” Wurfel said.
An alternative to state takeover would be a consent agreement that gives Bing more control over finances, while stopping short of appointing an emergency manager who could fire employees and nullify union contracts.
“As we have noted on numerous occasions, the longer it takes to address Detroit’s financial problems, the more painful the potential solutions become,” Dillon said in his statement.
Bing said he expected the appointment of a state review team and intends to cooperate. The mayor said the best remedy is his cost-cutting plan, including proposed concessions by employee unions, according to a statement.
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