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Mon December 10, 2012
Dillon initiates state review process for Detroit's finances
Detroit’s march toward a state-appointed emergency financial manager appeared to speed up Monday, as State Treasurer Andy Dillon announced his intention to start the review process that could end up there.
The city’s financial advisory board voted to support Dillon's move to start the process. It can last up to 30 days under Public Act 72.
Board members heard ever-more dire news about the city’s finances during the meeting
Chief Financial Officer Jack Martin and Program Management Director Kriss Andrews now say the city is burning through cash at a rate that will put it in a more roughly $100 million by the end of the fiscal year in June. And they now project the city’s overall deficit at $300-$400 million.
The financial advisory board was created as part of Detroit’s consent agreement with Lansing, as were Martin’s and Andrews’ positions.
However, the city has been slow to implement reforms, and none of the new appointees have been able to help right the ship.
Darrell Burks was just one of the board members who expressed frustration with city appointees.
Burks says the city’s fiscal projections have consistently proved too optimistic in the past few months, and he fears they’re running out of time.
“I think the challenge, or the impatience, is around the frustration of executing a strategy,” Burks said. “Whatever that strategy is, I just hope that we can move before we go to a point where we don’t have enough cash.”
The Board approved Dillon’s request for the review process unanimously. He spoke Monday as if the appointment of an emergency financial manager was all but inevitable.
Dillon acknowledged the city has about $80 million in an escrow account—money the state helped the city borrow earlier this year. The state is withholding that money because of disagreements over a so-called “milestone agreement” outlining reforms.
But Dillon said even if all that cash were released, Detroit would still be out of money before the end of the year.
“But I don’t want the balance in that escrow to fall below 50 [million], unless I’m really confident they’re breaking even,” Dillon said. ““If I have to go to the Governor and say ‘I think we need to take over,’ I want a reserve to make certain that we can keep police on the streets, and firefighters.”