Stephen Henderson: A Detroit review team with Detroit roots

[Novine]

"If you were inclined to believe that the state's review of Detroit's finances was a sneaky way to take over the city and disempower its people, the members of the team appointed Tuesday to figure out where Detroit stands should serve as a reality check.

Gov. Rick Snyder, Treasurer Andy Dillon and the others who had appointments all chose representatives with deep, historical connections to the city [[though thankfully not to city government), as well as expertise that will be needed."

Link to article

I'm inclined to view this as mostly a political move. I don't see a lot of "expertise" in the list that's going to come up with alternatives beyond what's going to be proposed. Snyder and Co. appear to have already decided that a state takeover is going to happen no matter what comes out of Detroit in the next month. By appointing a team with a lot of well-connected names, this preordained decision is given the gloss of having been decided by "Detroiters" when the truth is that the decision has already been made. But what do I know. Maybe Ike McKinnon and Co. will prove otherwise.

[Locke09]

I especially have a problem with someone on the board of Compuware Corp. being on the team. Compuware has significant contracts with the City of Detroit, and City employees are already having a hard time getting the administration to hold Compuware responsible for delivering on those projects that have already cost the City millions of dollars. The Compuware person being on board is a conflict of interests.

[Buy American]

"If you were inclined to believe that the state's review of Detroit's finances was a sneaky way to take over the city and disempower its people, the members of the team appointed Tuesday to figure out where Detroit stands should serve as a reality check.

Gov. Rick Snyder, Treasurer Andy Dillon and the others who had appointments all chose representatives with deep, historical connections to the city [[though thankfully not to city government), as well as expertise that will be needed."

I'm inclined to view this as mostly a political move. I don't see a lot of "expertise" in the list that's going to come up with alternatives beyond what's going to be proposed. Snyder and Co. appear to have already decided that a state takeover is going to happen no matter what comes out of Detroit in the next month. By appointing a team with a lot of well-connected names, this preordained decision is given the gloss of having been decided by "Detroiters" when the truth is that the decision has already been made. But what do I know. Maybe Ike McKinnon and Co. will prove otherwise.

"Dr. Isaiah "Ike" McKinnon, retired chief of police, City of Detroit"

"Conrad Mallett, Jr., Political director and Senior Executive Assistant to Mayor Coleman Young of Detroit, 1985-86"

These two individuals HAVE HAD have connections to City of Detroit government.

[ThisIsForTheHeart]

It should be a professional outside the state team that has no connection to the city or the people to give a fair review. Isn't there anyone from Boston that can do this?

[jackie5275]

I'm inclined to view this as mostly a political move. I don't see a lot of "expertise" in the list that's going to come up with alternatives beyond what's going to be proposed. Snyder and Co. appear to have already decided that a state takeover is going to happen no matter what comes out of Detroit in the next month. By appointing a team with a lot of well-connected names, this preordained decision is given the gloss of having been decided by "Detroiters" when the truth is that the decision has already been made. But what do I know. Maybe Ike McKinnon and Co. will prove otherwise.

I agree with you Novine. From what I can determine, six members of the "team" have no financial background, so what purpose will they serve in performing a financial review? The Nerd is just going through the motions & CYAing before he drops the other shoe.

[313WX]

lol...

Snyder and Company [[supporters and far right legislators in Lansing) never stop, do they?

[313WX]

It should be a professional outside the state team that has no connection to the city or the people to give a fair review. Isn't there anyone from Boston that can do this?

Agreed.

I personally don't like the idea of having anyone who has a stake in whether or not Detroit fails handle this situation, but I guess I have no control over that.

[laphoque]

It should be a professional outside the state team that has no connection to the city or the people to give a fair review. Isn't there anyone from Boston that can do this?

Or better yet Vancouver. If we're going to remake Detroit let's get people who know what a city should look like.

[Lowell]

It should be a professional outside the state team that has no connection to the city or the people to give a fair review. Isn't there anyone from Boston that can do this?

Good idea but politically flawed. The choice of those with 'Detroit roots' is part of Snyder's CYA. It deflates the 'outsiders taking over' charge and when and if it fails it is just Detroiters screwing up again, not him. How quickly we forget the first DPS takeover with David Adamany leading the charge of appointees. How quick he fled and how quietly it all blew over and how little mud landed in Lansing.

This is a huge crisis and has the potential to bring down many careers, so look carefully behind the mirrors and between the words.

[mwilbert]

Even in theory, the role of this group is just to review Detroit's finances, not turn it into a better place. Most of these people are not financial experts, and at least one of them is none too bright. They are being brought in for one reason, which is to make it clear that this is not a crisis invented by people who don't like the city or its residents, and for that reason using well-known local folks rather than outsiders is appropriate. They aren't going to come up with some alternative to massive cuts, because there isn't any. Massive cuts won't even be enough.

The people who don't already believe that radical and unpopular steps will be needed to stabilize Detroit's fiscal situation may not find this group convincing either, but it may convince somebody.

[sehender1]

"If you were inclined to believe that the state's review of Detroit's finances was a sneaky way to take over the city and disempower its people, the members of the team appointed Tuesday to figure out where Detroit stands should serve as a reality check.

Gov. Rick Snyder, Treasurer Andy Dillon and the others who had appointments all chose representatives with deep, historical connections to the city [[though thankfully not to city government), as well as expertise that will be needed."

Link to article

I'm inclined to view this as mostly a political move. I don't see a lot of "expertise" in the list that's going to come up with alternatives beyond what's going to be proposed. Snyder and Co. appear to have already decided that a state takeover is going to happen no matter what comes out of Detroit in the next month. By appointing a team with a lot of well-connected names, this preordained decision is given the gloss of having been decided by "Detroiters" when the truth is that the decision has already been made. But what do I know. Maybe Ike McKinnon and Co. will prove otherwise.

Agreed, mostly..
Couple things..
1) If the decision about EM vs. no-EM is preordained, it was made so by the city and its leadership, not the guv, who's essentially playing defense here for the entire state. Snyder cannot let the city run out of cash, which by my read will happen mid- to late- Jan. Remember, the Ernst and Young report predicted April based on a straight-line risk assessment; i.e., that things would not continue to deteriorate. Certainly, they are [[necessary overtime for police; no extra casino money that was in the budget) so something must be done quickly.

2) Snyder really wants no part of this; he is genuine in his desire for Detroit to figure this out on his own. There is no upside [[politically or otherwise) for him to "take over" the city. OUtstaters don't care or don't want the state spending money [[which it will have to do big-time) during an EM's tenure. And it's not like he's likely to pick up votes in Detroit, even if he makes things better... So I can't really describe the Detroit-heavy review team as CYA.. I think it's more sincere than that..

3) Some of the non-financial folks are on there for particular areas of expertise that are important to the city's functioning. McKinnon with the police, for example.. But the other "non-financials" all have financial experience in their backgrounds. Both Stancato and Price were bankers. Mallett's running a hospital..

[Baselinepunk]

One question and one comment.

If the State wants to help out Detroit why don't they repay the cash owed the City?

I have big issues with Reid on this "commission". The man can barely write a coherent sentence and I seriously doubt that he is nothing but a throw-in/window dressing.

[Novine]

"3) Some of the non-financial folks are on there for particular areas of expertise that are important to the city's functioning. McKinnon with the police, for example.. But the other "non-financials" all have financial experience in their backgrounds. Both Stancato and Price were bankers. Mallett's running a hospital.."

For the most part, I didn't mean to dismiss the experience of the people selected. But I don't see anything coming from this group that hasn't been already talked about. The main power that the team appears to have is the ability to "Negotiate and sign a consent agreement with the chief administrative officer of the unit of local government". If the team doesn't take that steps, it's nothing more than a pro forma review of the books which is going to come to the same conclusion that every other review has reached. The end result will be the appointment of an emergency manager.

It's possible that a consent agreement could be developed by the team. But I don't see that happening. A consent agreement won't give anyone the authority to do the things that an emergency manager can do that are likely to be necessary to fix Detroit's finances. That would include modifying or canceling labor contracts, selling assets, etc. An emergency manager, with the Governor's approval, even has the power to dissolve or disincorporate a local unit of government.

http://www.michigan.gov/documents/tr...4_348233_7.pdf

[cramerro]

Good idea but politically flawed. The choice of those with 'Detroit roots' is part of Snyder's CYA. It deflates the 'outsiders taking over' charge and when and if it fails it is just Detroiters screwing up again, not him. How quickly we forget the first DPS takeover with David Adamany leading the charge of appointees. How quick he fled and how quietly it all blew over and how little mud landed in Lansing.

This is a huge crisis and has the potential to bring down many careers, so look carefully behind the mirrors and between the words.

Agreed. This is a step before the EM, where the "best local minds" get together and review the finances and vet possible solutions. The time for someone from outside the region to come in and gut the place is the next step... the EFM. If it has got to the point of the EFM, to me, the flag has been thrown up saying, "we can't fix this."

I really hope that some agreement can be hammered out with the EFM legislation. The more I read from around the country, the more the EFM is important buffer/failsafe from bankruptcy. Based on the articles I've read, the EFM is basically bankruptcy, run by someone appointed by the governor instead of by a judge out of the 6th district court of appeals [[MI, OH, KY, IN?). Bankruptcy would have [[IMHO) a much greater, long-term, and wide-reaching impact [[e.g. on Oakland County) than any sort of EFM.

[corktownyuppie]

One question and one comment.

If the State wants to help out Detroit why don't they repay the cash owed the City?

I'm pushing the envelope on what I'm really knowledgable about, so someone will have to correct me if I'm wrong.

Answer #1: The state doesn't have the money to re-pay Detroit. So reasonable people can disagree about what it the state *wants* to do, but that's all speculation. They can't do what they can't do.

This is like when you're soldiers stuck on the front line and almost out of ammo. You call up the line and request some backup and a fresh supply of ammunition. The response you get back is that the bridge they use to provide supply has been damaged and we're 4-6 hours from repair.

You can't turn around and say, "Well you PROMISED us the supplies!"

Answer #2: I know that the State owes Detroit money. What I believe to be true is that they screwed many, many municipalities out of revenue that was to be shared.

Why? Because every governmental unit in this state had made financial promises based on a tax base we used to have. Not the one we have today. Unfortunately, the promises went up when the money went up. But they didn't go back down when the money went down.

Guys, the reality is that Detroit will get fixed. But in the process thousands and thousands of people will get screwed. That's bankruptcy, whether it's an EM making the decisions swiftly, or a bankruptcy judge making the decisions slowly.

It's the hope that if we do it swiftly, we can minimized the casualties. But no matter how we do it, it's gonna suck.

We talk about the GM bankruptcy/bailout as a streamlined way of shifting equity from the stockholders to pay off the lenders while not being so damaging to the company that it could no longer act as a revenue-generator. But tell that to the salaried pensioners at Delphi, many of whom got totally screwed in the process.

Detroit will rise again. It will not necessarily look the same as it does today. It will likely me smaller both in population and geographical footprint. Hopefully it will be smarter and more entrepreneurial. People will leave. Others will be "forced out" by how bad the environment is.

Many of those who were relying on city services will likely suffer more than those who were more self-reliant. The wealthy, many of whom are already paying for their own private or semi-private security will likely suffer somewhat. But the one who will likely be annihilated are the middle-income blue collar family who is not only relying on the city to provide lighting, water, and security...but also to teach the children and employ the parents.

But once the balance of money in vs. money out is restored, the rebuilding process will begin. And just like the Detroit of 2000 has no resemblance to the Detroit of 1950...and the Detroit of 1950 has no resemblance to the Detroit of 1890...the Detroit of 2040 will look nothing like the Detroit of 2010.

Let's just get it over with already!

[Novine]

Is the state out of money? No, if it can give businesses a $1.8 billion tax break, it's not out of money. But you're right, Detroit is only one among hundreds of communities "promised" money that never came. In Detroit's case, the state forced the city to give up income tax revenue in exchange for revenue sharing dollars that were later cut off. In that way, Detroit is different than everyone else. But there's no way Detroit could get money without an uproar from every other community that lost out too demanding their share as well. Easier to claim that there's no money and leave Detroit and every other community to fend for themselves.

[townonenorth]

Is the state out of money? No, if it can give businesses a $1.8 billion tax break, it's not out of money. But you're right, Detroit is only one among hundreds of communities "promised" money that never came. In Detroit's case, the state forced the city to give up income tax revenue in exchange for revenue sharing dollars that were later cut off. In that way, Detroit is different than everyone else. But there's no way Detroit could get money without an uproar from every other community that lost out too demanding their share as well. Easier to claim that there's no money and leave Detroit and every other community to fend for themselves.

A 10% cut in the 1.8 billion tax break would be a good start in getting some cash back into the system, although the 1.8 billion mentioned is probably over an extended period, so the cash value of the 10% is probably less in a yearly period.

[corktownyuppie]

Is the state out of money? No, if it can give businesses a $1.8 billion tax break, it's not out of money. But you're right, Detroit is only one among hundreds of communities "promised" money that never came. In Detroit's case, the state forced the city to give up income tax revenue in exchange for revenue sharing dollars that were later cut off. In that way, Detroit is different than everyone else. But there's no way Detroit could get money without an uproar from every other community that lost out too demanding their share as well. Easier to claim that there's no money and leave Detroit and every other community to fend for themselves.

I agree with you on the second part. I do have to take issue with the first part...

No, if it can give businesses a $1.8 billion tax break, it's not out of money.

The above statement is only true if you presume that the above businesses would locate their business inside the state without the tax subsidies.

Answer? They won't.

I got into the same argument with someone upset about the neighborhoods "subsidizing" downtown residents with property tax-free zones. Guess what? If I had to pay property tax PLUS my income tax? I wouldn't live in the city.

Now you've lost the property tax AND the income tax.

Now whether you think that such tax breaks are a good investment for the city [[or state)...or whether you think the process by which they are allocated are fair or unfair...those are legit questions that deserve serious discussion and debate.

But to state that by giving $1.8B in tax breaks that the state is actually walking away from $1.8 Billion...it's just not meaningful for any real policy debate.

[Baselinepunk]

Cork/Nov - -

What I heard from Bing was that the State owes monies to the City when the City cut a deal with the State to help it out during the early 90s. This, I think, is a very different and separate situation from the State "shared-revenue" thing.

My thinking is that even if the State can't pay the money back [[and we'll speculate that the present State surplus will be used to repay the public employees that were screwed, entered into a lawsuit and won) the State can at least "make good" through their word and monthly payments. This should be used in the asset column. Perhaps by adopting a 3 year budget plan, alla LBP, debits could be spread out on a longer term. It's what LBP et. al do to show "fiscal heath" of Oakland County, I do believe.

[corktownyuppie]

Cork/Nov - -

What I heard from Bing was that the State owes monies to the City when the City cut a deal with the State to help it out during the early 90s. This, I think, is a very different and separate situation from the State "shared-revenue" thing.

My thinking is that even if the State can't pay the money back [[and we'll speculate that the present State surplus will be used to repay the public employees that were screwed, entered into a lawsuit and won) the State can at least "make good" through their word and monthly payments. This should be used in the asset column. Perhaps by adopting a 3 year budget plan, alla LBP, debits could be spread out on a longer term. It's what LBP et. al do to show "fiscal heath" of Oakland County, I do believe.

Interesting.

At the minimum...I would happily advocate that the fund we are "owed" be given to us [[Detroit), HOWEVA...with some strings attached:

[[1) those funds are to be used not to solve an operating deficit, but for the sole purpose of either re-financing debt or to be used as a capital investment to facilitate a right-sizing of the city or re-structuring of the city governmental structure....

For example if that $200MM could be spent moving everyone in the city into a tight 40 square mile radius while shuttering the rest of the city from service costs and legacy costs, I'd see that as a good investment. Using those funds to make payroll? Not so much.

[[2) I'd want the funds to be in a special trust overseen by a state-appointed committee and not controlled by the city.

[[3) I'd want the funds to be a loan from a benevolent lender who could lend it to us at the prevailing rate for AA+ rated munis.

[Baselinepunk]

Personally, I don't like strings; even more so when the City gave the State 1/4 of a billion with no strings so I don't see a reason why that money should be conditionally returned. Giving this money back, IMHO, would go a long way .... publicly, PR wise, what have you ... .to show that the State isn't out gunning for "failed" Cities. Right now the EFM is seen [[among other things) as a way for Republicans to take the Left down a few notches by hurting their pocketbook. It's happening in the State around us so ....

Any ways; instead of the State saying [[yes, some of the present State Congresspersons, figuratively) "we were not there at that time and we can't be held to that agreement so go fuck yourself) the State could say "yes, we owe you that money and you will be paid".

I mean if the State can't even pay back a "loan" that it's biggest [[and one of its most important) City gave to them, how can the State even have the balls to come in with an EFM? That's so wrong at so many levels we don't have the time or bandwidth to go over it.

[dookie joe]

What a joke. Anyone remember the circumstances under which "retired police chief" Ike McKinnon retired? That's right -- he resigned after a scandal surfaced involving improprieties with the Detroit Police promotional exam, for which his personal driver was convicted.

Let's see...who else can we pick to take an unbiased look at the city's finances? I know! How about a high-ranking DMC official? Who runs the DMC again? Oh, yeah, that's right -- Mike Duggin, of the McNamara Machine that spawned Kwame, Killer, Cheeks and all the rest of the slimy crooks who have picked this city clean.

That's how we get rid of all the cronyism in the city -- pick two people to oversee things who are tied up in .... cronyism in the city.

What a joke. Except it ain't funny.

[corktownyuppie]

Personally, I don't like strings; even more so when the City gave the State 1/4 of a billion with no strings so I don't see a reason why that money should be conditionally returned. Giving this money back, IMHO, would go a long way .... publicly, PR wise, what have you ... .to show that the State isn't out gunning for "failed" Cities. Right now the EFM is seen [[among other things) as a way for Republicans to take the Left down a few notches by hurting their pocketbook. It's happening in the State around us so ....

Any ways; instead of the State saying [[yes, some of the present State Congresspersons, figuratively) "we were not there at that time and we can't be held to that agreement so go fuck yourself) the State could say "yes, we owe you that money and you will be paid".

I mean if the State can't even pay back a "loan" that it's biggest [[and one of its most important) City gave to them, how can the State even have the balls to come in with an EFM? That's so wrong at so many levels we don't have the time or bandwidth to go over it.

Ok. I think your ideas are reasonable, even if we disagree. Let's take your proposition and look at the next step. If we agree that the state should give the city the money it's owed, how can we assure the state that the funds will be put to good use? Certainly, I'd hope that you agree that spending a single dollar on operating costs without restructuring the severely imbalanced revenue shortfall is just throwing good money after bad.

Even if we agree that the state should send the funds -- and being a Detroit myself, it'll be a whole lot easier to convince me than some of the out-staters -- how can we convincingly state the funds will be put to good use?

The state's willingness to go along with this has to be more than "please prove to us that you're not setting us up to fail." It almost has to be, "A municipal bankruptcy would so royally screw the credit rating of the surrounding counties that it will drive everyone's taxes up for a long time. And since you owe us this money ANYWAY...why don't you help us use that money to re-structure our finances and help save your credit ratings?"

And even THAT would be a hard sell. But I were a state rep, I'd go to bat for the city with it.

[Novine]

"The above statement is only true if you presume that the above businesses would locate their business inside the state without the tax subsidies.

Answer? They won't."

My fault for using the phrase "tax breaks". This amount isn't from tax breaks given to businesses to locate here. It's from the elimination of the MBT and change to the a 6% state corporate tax will result in a $1.8 billion reduction in revenue to the state from businesses that are here today and pay taxes today. I believe that 2/3rds of all existing businesses will be exempt from the corporate tax. Some will make that up by paying more in individual income taxes on pass-through profits but either way, the hit on the state's bottom line is $1.8 billion. At the same time, Snyder also cut revenue sharing to local governments. The reduction was roughly 1/3 of the dollars that were coming from Lansing. Gone with no opportunity to recover those dollars.

[Baselinepunk]

"If we agree that the state should give the city the money it's owed, how can we assure the state that the funds will be put to good use?"

We can't; and I think that's true for many situations both here, and in life in general. In fact, this would still be a condition. Why should the State have to be reassured that the money is spent on items of "good use"? It wasn't there money to beginning with. What reassurances did Detroit get when the money went to Lansing? That's right; and the State is going back on that by not giving the money back to the City.

"Certainly, I'd hope that you agree that spending a single dollar on operating costs without restructuring the severely imbalanced revenue shortfall is just throwing good money after bad."

I think both can happen.

I think it is very short-sighted for folks to immediately throw themselves on the EFM bus when that bus has already ran over too many people. So, the EFM wasn't "strong enough" in the past so it's changed now to give it more power. Hmmm. I seriously don't like that one bit. For a political party that has championed "local control", there certainly has been a move by the Republicans to force or induce consolidation.

The EFM is a proven failure but [[like Charter Schools) is constantly leaned upon as an answer instead of dealing with the real issues; shrinking tax based, destruction of community character, a State that is hoarding money from them, underfunded retirement and City corruption.

Rant aside, I don't think that anyone out of State is the answer either. One answer, to me at least, is getting people involved with the City at all level who will put the City above their personal/political goals, agendas, biases and "what owed to them" . I think that there are way too many folks involved now in leadership that feel the City should support them, instead of them supporting the City.

"The state's willingness to go along with this has to be more than "please prove to us that you're not setting us up to fail." It almost has to be, "A municipal bankruptcy would so royally screw the credit rating of the surrounding counties that it will drive everyone's taxes up for a long time."

I disagree completely. The State has created the metric by which Detroit will fail; no doubt about it. This is just a dance toward appeasement and when it does happen the State [[read: Dick and Friends) will be able to feel warm and fuzzy about what happened and sleep at night.

Nothing more; nothing less.