Detroit's bankruptcy case being watched by other financially troubled Michigan cities and schools

Dec 3, 2013

Cities across Michigan are closely watching what happens to Detroit in bankruptcy court this week.

More than a dozen Michigan cities and school districts are currently under some form of state oversight.

The Detroit suburb of Lincoln Park could be next in line to have its finances reviewed by the state.   The city’s pension system is largely unfunded, and city property tax revenues continue to fall.

A state Treasury Department panel decided today [Monday] that Lincoln Park is in “probable financial stress." It will be up to the governor to appoint a review team to check out the city’s books.

Joe Merucci is Lincoln Park’s city manager. He hopes the city can avoid ending up in bankruptcy court.

“I would hope not. I guess the first case will be the Detroit case and we’ll see whether that will happen. Our situation is similar,” says Merucci.   He says the result of a Chapter 9 filing would affect Lincoln Park’s retired city workers,  “You would hate to wipe out 300 people and wipe out our pension debt as well.”

Merucci says the city is negotiating new contracts with city unions.    But he says the key is to stabilize the city’s declining property tax revenues. 

“Our hope is this…that property values begin to turn around,” says Merucci, “This year they went down 6.8%. We believe in two years they’ll flat line.”

The governor’s office announced review teams for the city of Highland Park and Royal Oak Township today.

There are currently emergency managers running eight Michigan cities and school districts. Another ten cities and school districts are in some phase of state oversight or financial review.