Financial Emergency Seen by Michigan Governor in 2 Cities

Michigan Governor Rick Snyder declared financial emergencies in Highland Park and Royal Oak Township, the first step toward possible appointment of fiscal managers for the Detroit-area communities.

The towns have until Feb. 6 to request hearings on Snyder’s determination, according to a statement by the Michigan Department of Treasury. If no appeal is made, the communities could choose among a state-appointed emergency manager, a financial consent agreement, mediation with creditors or bankruptcy.

“We’re not going to welcome an emergency manager in our city,” said Highland Park Mayor DeAndre Windom, adding that the city of 3 square miles (7.8 square kilometers) that lies within Detroit’s borders has had three emergency managers since 2001. He said the city needs economic recovery, not just a balancing of its books.

The two communities are the latest to fall under Michigan’s control. Lagging local revenue and uncontrolled debt have resulted in emergency managers for five other cities, including bankrupt Detroit, which has liabilities of about $18 billion, and three school districts. Emergency managers have broad powers to cut costs, reorganize government and even alter union contracts. Last year, the state ended its control over Pontiac and Ecorse.

In Hock

Windom said in a phone interview that he would push for a public hearing on Highland Park, a city of about 11,000, to appeal Snyder’s determination.

“You can’t cut your way out of problems that happen in a lot of urban communities,” Windom said. “You have to create jobs and opportunity.”

A state review team found Highland Park had $19.5 million in unpaid bills, of which $18.2 million is due to the Detroit water-and-sewer system. Highland Park’s schools already have their own emergency manager.

As of June, Highland Park had more than $48.5 million in long-term debt and $44.8 million in unfunded retirement benefits, according to the review.

Royal Oak Township has about 2,400 people within its 0.6 square mile. It failed to adopt a budget for the current fiscal year, according to the state review. In November, the township lost police services from the Oakland County sheriff’s department because the township didn’t pay its bills.

Royal Oak saw its year-end balance drop to a deficit of $298,983 in 2012 from a $200,324 surplus a year earlier, according to the Treasury Department.

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