Behind Detroit consent agreement, it's all politics

Mar 16, 2012

Governor Snyder and other state officials have told Detroit this week it needs to accept a consent agreement to avoid going broke.

A draft agreement has been presented to the City Council. It would give the state a great deal of say in how Detroit is run.

But lots of politics stand in the way of reaching an agreement.

The consent agreement State Treasurer Andy Dillon has crafted for Detroit—the only “official” proposal out there right now--can be seen in one of two ways.

It’s either a way to empower Detroit officials to change the city’s deep financial problems—while the state looks on over their shoulder.

Or, it’s just an emergency manager, lite-version—a sneaky way for the state to completely take over the city, leaving elected officials in place only as figureheads.

That second way is how more than a few folks in Detroit see it—including some members of the Detroit City Council, and Mayor Dave Bing. Both parties would need to approve a consent agreement.

Bing has lashed out publicly against the state’s proposal—and Governor Snyder.

The Mayor says there’s “no way in hell” he’ll approve a deal that, in his mind, essentially turns the city over to a nine-member financial advisory board—even if the mayor and Council get to appoint some of them.

City Council President Charles Pugh is open to the idea of a consent agreement. But he has similar concerns.

“I see no problem with having someone from the state here to make sure that we’re meeting certain benchmarks,” Pugh said. “But I can’t have somebody here from the state second-guessing our decisions, and telling us what decisions to make.”

And in reality, the state proposal does give this financial advisory board ultimate authority over most city functions.

But state officials say they’ve based this advisory board idea on a model that helped walk other major American cities back from the financial brink—namely, New York City in the 1970s, and more recently, Washington DC.

The state review team looking into Detroit’s finances has even brought in former DC Mayor Tony Williams to help advocate for the consent agreement.

In this case, Williams says a financial advisory board is the “mechanism” that helps get distasteful but necessary things done. But elected officials can still guide the process. At least, Williams says, that’s how it’s worked out in the past.

“I think in these cities, the story was that the political leadership came together, worked together and succeeded together,” Williams told the state review team during a meeting Tuesday. “And really, in a way, they subordinated the control mechanism because the elected officials were leading the charge doing their job.”

In fact, Williams helped lead Washington’s so-called “control board” as the city’s chief financial officer. The city’s finances turned around dramatically, and he then got himself elected mayor—twice.

Williams says if Detroit’s leaders are smart, they’ll realize this framework gives them more power to make the kind of sweeping change Detroit needs.

But Detroit officials counter the state’s current proposal is all stick and no carrot. That’s especially the case when it comes to forwarding the city some cash before it runs out—something that’s expected to happen in the next couple of months.

Saunteel Jenkins has been one of the more moderate members of the City Council. She’s open to the idea of a consent agreement with firm conditions. 

But Jenkins says it’s ridiculous for the state not to offer any money, because they’ve also contributed to the problem.

“We cannot ignore the fact that part of our problem is the state continues to cut revenue sharing, without giving us a way to raise that revenue,” Jenkins said.

But the Governor says Detroit shouldn’t “expect” a cash infusion. State Treasurer Dillon says the state plans to help Detroit secure $137 million in loans. But he hasn’t put any of that language on paper yet.

In fact, there’s a lot that still needs to be put on paper. Dillon insists what’s out there now is just a draft—and the state is open to adjusting its terms, if city leaders are open to negotiating.

“We invite their input,” Dillon said. “We had various versions of it last week, so it’s an evolving document.”

Bing’s office and Council staffers are hammering out a counter-proposal right now. They’ll need to work fast. Dillon says he wants something for the review team to consider when they meet again next week.

“What I don’t want to do is get towards this March 26th date (review team deadline), and have the Governor not have to time to look at a Plan B if we need a Plan B,” Dillon said.

And everyone knows what “Plan B” means: an emergency manager.

It’s hard to keep up with what’s going on in this political chess game. And most of this is being worked out behind closed doors—raising a whole host of legal and ethical questions.

But if there’s one given, it’s that Detroit’s leverage is limited. And their position gets even weaker as their bank account approaches zero—a time bomb that could blow up before the end of April.