Emergency Manager Law

[SWMAP]

Detroiter 62, you state your "understanding" that the State owes Detroit $286 million from Revenue Sharing dollars. I think this is pretty much a myth [[and an expanding myth) propagandized by Joann Watson and the Michigan Chronicle. Here is an explanation from Jeff Wattrick on the MLIVE news service today:

"Some Detroit politicians, including Mayor Dave Bing and City Councilwoman Joann Watson, have argued the state owes the city $220 million in unpaid revenue sharing money. They also argue that money would go a long way toward righting the city’s fiscal ship.

Whether or not, the money is actually owed is a tricky question.

Back in 1997, then-Governor John Engler and then-Mayor Dennis Archer struck a deal to ensure Detroit received guaranteed fixed revenue sharing payments. In exchange, the city agreed to gradually lower its income tax from 3% to 2% over ten years.

Halfway through the decade-long tax cut plan, Detroit stopped its incremental tax rate reductions in 2004. Then-Governor Jennifer Granholm cut revenue sharing payments across the board to balance the state budget the year before, including the promised payment to Detroit.

In the end, Detroit residents were left with a 2.5% income tax rate and lower-than-anticipated annual revenue sharing payments.

However, does any of that mean the state still owes Detroit revenue sharing money from years past?

That depends who you ask. In situations where two parties disagree on the terms of an agreement, there is a place where such disputes can be remedied: a court of law. If the city officials really believe Detroit is owed $220 million, why not sue the state?

Lawyer/Fox 2 legal analyst/WYXT morning host Charlie Langton is wondering the same thing.

“I’ve said they should at least explore it,” said Langton. “Now there are some—I could argue both sides of this—but I think you’ve got to call into question the fact that there is a possibility of a lawsuit, but there doesn’t appear to me anyone is going to take up the charge.”

The Bing Administration did not respond to requests to inquiries about what, if any, legal remedies it is pursuing to obtain those dollars.

One reason the city may be avoiding legal action is politics. Arguably, a lawsuit against the state might poison the well as Bing and Snyder work toward [[haggle over?) some kind of mutual arrangement to solve Detroit’s fiscal woes.

It’s also possible, Langton says, that Detroit waited too long to sue for this pot of money.

“A problem may very well be the statute of limitations issue,” he said. “I mean this was from Engler…this was in 1997. That was last century. However, I would then argue this was an agreement that continued year after year after year, so therefore you don’t go back to the agreement in ’97, you say you can sue now because of the damage today.”

So, does the state of Michigan owe the city of Detroit $220 million? Absent a court case, it may be a question without an answer."

[Wesley Mouch]

From what I understand the State of Michigan already owes Detroit 286 million in revenue sharing that was never paid to the city of Detroit.

michigancitizen.com/state-owes-detroit-m-p6099-1.htm

michigancitizen.com/state-owes-detroit-millions-p2111-1.htm

I believe if Detroit signed the consent agreement the state says that they will loan Detroit about 180 million.

If the state withheld the money they agreed to pay Detroit before, why should the city believe them now ?

Also if Detroit signs the consent agreement I believe it will be binding contract and will remain in effect even if the Emergency Financial Manger law is repealed.

Also I dont understand why the state thinks that privatizing most of the city services will save money ?

Private companies want to make a profit, they have a profit margin built into their business model, how does this make the services cheaper ?

Especially the water department, won't water rates go up all over the tri-county area once a private company takes over the water department to meet their profit margin ?

Also, once a bank has foreclosed on a house, do they pay property taxes to the city ? If the house catches fire, they expect the city to put out the fire.

Also have any Emergency mangers in the state of michigan got cities out of financial trouble and relinquished control back to the city goverment-
have you heard of one instance ?

Snyder removed the Michigan Business Tax [[on gross receipts?) and gave corporations a 1.65 billion tax cut, he replaced this with an income tax on business profits which I believe would be much less, therefore less income for the state and the cities, I believe this translates into less revenue sharing with cities. This is more trickle down economics which has not worked in the last 20 years.

Yuppie's post covers most... but let me add a couple of points.
1) If water was privatized, it'd be under the MPSC, just like DTE. Their profit would be granted only if they saved the money elsewhere. The MPSC may be a laptop for industry, but they do keep an eye on the companies.
2) tax policy: We may not agree on trickle-down economics, but the SBT tax discouraged businesses from operating in Michigan. Unlike almost anyone else, you paid tax on gross revenues, not your net. So let's say you work on commission, and you sell a $100 vacuum cleaner. You pay tax on $100. Not on the $20 you keep. This was a bad tax.
3) Hamtramck emerged from EFM. And while he was hated for his work by many, he did get the city back to financial health. Its current problems are new problems.

[Danny]

GHETTO ALERT!

The Michigan State Supreme Court Judge ruled the the two consent agreements without a public meeting is ILLEGAL. A hearing is scheduled on March 29th. By that time the state review team would either force Gov. Snyder, the Nerd to appoint an emergency manager for Detroit City Government or postpone it.

[Wesley Mouch]

Detroiter 62, you state your "understanding" that the State owes Detroit $286 million from Revenue Sharing dollars. I think this is pretty much a myth [[and an expanding myth) propagandized by Joann Watson and the Michigan Chronicle. Here is an explanation from Jeff Wattrick on the MLIVE news service today:
<snip>
So, does the state of Michigan owe the city of Detroit $220 million? Absent a court case, it may be a question without an answer."

It is not however without a purpose. Questions without answers are the best kind of questions. And this one is perfect. After all, if you get an answer, then the question goes away. So they'll never file suit against the State. Why would they. This question has a great purpose.

What's the purpose you ask?

The purpose is to deflect attention away from the City's problem and blame the State.

So your anger heads to Lansing, not to JoAnne Watson.

Gee, if only the State didn't hate us and would send us what we're due. Then everything will be OK. See, there's really no problem in Detroit. Just Lansing racism.

So its a great question, if you really want to avoid facing your problems.

[Danny]

If Detroit goes bankrupt after April 1st 2012 what would happen?

IN THEORY

1. It's credit rating will drop making borrowing more money from its creditors very difficult.Most of the statutory revenue sharing and collected tax dollars will be garnished to its collectors in which Detroit City Government borrowed during the last 50 to 100 years.

2. Detroit City Government will not be able to pay all its city employees that includes, D-DOT bus drivers, city maintenance, garbage workers for trash pick up, public lighting dept, public housing dept, police officers, firefighters and EMS workers. [[That includes retirement pensions.)

3. Detroit City Government will not be able to pay DTE Energy from operating the City County Building, maintenance areas, keeping public rec centers open. Street lighting will be turned off and be taking down from its streets. [[ Look what happen to the ghettohoods of Highland Park.)

It would be total chaos and anarchy in the Motor City in a matter of weeks.

[rex]

Mayor and the council are all over the place trying to figure out how to keep things close to how they are. Mind set seems to be, we got ourselves into this mess so let us get out and yea by the way. We need 100 million and a little debt forgiveness.
Perhaps I dont fully understand what an emergency manager does. Couldn't the emergency manager just come in and discard the city council? In the interest of self preservation city council should be trying to be as cooperative as possible. Instead they took an offensive position. If the state doesn't call their bluff i'll be astonished. Out of curiosity I looked into the education of the city council members. Unless I overlooked some things only one of them have any formal instruction on how to manage the finances or administrate anything. Criminal justice background, journalism backgrounds, undisclosed majors, social work. 68 dollar property tax paying Joanne Watson probably shouldn't be trusted with anything. If she isnt bright enough to realize something was wrong she should be removed. My guess is she is just a crook. Thats part of the reason Detroit is running out of money in the first place. City isn't collecting enough in property taxes to maintain the services it needs to render.

[Novine]

"Lawyer/Fox 2 legal analyst/WYXT morning host Charlie Langton is wondering the same thing."


Wondering about what? There was no legal agreement or contract between the state and the City of Detroit.

Wattrick said:


"Back in 1997, then-Governor John Engler and then-Mayor Dennis Archer struck a deal to ensure Detroit received guaranteed fixed revenue sharing payments. In exchange, the city agreed to gradually lower its income tax from 3% to 2% over ten years."


A deal doesn't equal an agreement or a legal contract. Ask anyone from Detroit or the city to show you any agreement or contract that covers this "deal". They can't and they won't because no such document exists.

What happened was the state laws governing the income tax and state revenue sharing were adjusted to reflect the "deal". Then a few years later, the city stopped lowering the income tax rate and the state cut the amount of revenue to all communities, not just Detroit. When that happened, no one claimed the "deal" had been violated. Only now are people claiming that some agreement exists that is being violated.

If Detroit could sue for lost revenue sharing, so could every other community in the state. But not one of them is suing the state because they know that the state has the authority to cut to statutory revenue sharing even if it harms local communities. It's bad enough that the uninformed are spreading this lie but it's pretty sorry that elected officials and those who should know better, like Charlie Langton, are perpetuating this myth.

[professorscott]

The wrangling about the money which the State either does or does not owe the City is pointless. If the State were to suddenly find a way to drop, let's say, $300 million into the City's lap, at the current burn rate I believe the City would go through the money between now and late summer and then they would be back to exactly where they are right now.

The fact that every single day the City is spending way more money than it is taking in, is the source of the crisis. Putting more money into the current system is not going to solve anything.

By the way, my numbers may not be precisely correct, and it doesn't matter. The only way out of this is for the City to spend no more than it brings in on a day-to-day basis. Arguing about money owed by the State, or that our democracy is being usurped, or anything else, is just avoiding the actual problem. Nothing else matters: Detroit must spend no more than it makes. However we get to a solution to that problem, that is what we must do, and the only thing that matters.

[SWMAP]

I think that Langton was being ironical and calling out the people perpetuating the myth: put your money down and bring a lawsuit because that'll settle it.

The grape-throwers were out in force today at that hearing: Sandra Hines, Rev. [[his first name, not an honorific) David Murray. They are dregs but they can talk a good line.

[corktownyuppie]

I think that Langton was being ironical and calling out the people perpetuating the myth: put your money down and bring a lawsuit because that'll settle it.

The grape-throwers were out in force today at that hearing: Sandra Hines, Rev. [[his first name, not an honorific) David Murray. They are dregs but they can talk a good line.

I'm writing a letter to Freep Editor Henderson...it's ridiculous that they use Reverend David Murray's name without citing the fact that "Reverend" not a title, but his legal first name from a legal name change. Also, it is inappropriate to abbreviate it to Rev., as doing so implies titular status. If I legally changed my name to "Father Corktownyuppie", it would be inaccurate to refer to me as Fr. Corktownyuppie. If anything, it should be Mr. Father Corktownyuppie.

Otherwise, I'm having my name changed to:

Mayor Corktownyuppie
Harvard Rhode Scholar Corktownyuppie
Coleman Young Corktownyuppie


the possibilities are endless.

[rex]

Why does the state owe Detroit 300 million?
If that truly is the case why wouldn't/aren't they writing
that check?

[corktownyuppie]

Why does the state owe Detroit 300 million?
If that truly is the case why wouldn't/aren't they writing
that check?

It's complicated. It's not clear that anyone owes anyone anything. Even less clear is the assuming that the state owes Detroit 300 million, the legal window for doing anything about it might have passed long ago.

[erikd]

"Lawyer/Fox 2 legal analyst/WYXT morning host Charlie Langton is wondering the same thing."


Wondering about what? There was no legal agreement or contract between the state and the City of Detroit.

Wattrick said:


"Back in 1997, then-Governor John Engler and then-Mayor Dennis Archer struck a deal to ensure Detroit received guaranteed fixed revenue sharing payments. In exchange, the city agreed to gradually lower its income tax from 3% to 2% over ten years."


A deal doesn't equal an agreement or a legal contract. Ask anyone from Detroit or the city to show you any agreement or contract that covers this "deal". They can't and they won't because no such document exists.

What happened was the state laws governing the income tax and state revenue sharing were adjusted to reflect the "deal". Then a few years later, the city stopped lowering the income tax rate and the state cut the amount of revenue to all communities, not just Detroit. When that happened, no one claimed the "deal" had been violated. Only now are people claiming that some agreement exists that is being violated.

If Detroit could sue for lost revenue sharing, so could every other community in the state. But not one of them is suing the state because they know that the state has the authority to cut to statutory revenue sharing even if it harms local communities. It's bad enough that the uninformed are spreading this lie but it's pretty sorry that elected officials and those who should know better, like Charlie Langton, are perpetuating this myth.

Concerning the deal, it was the state that broke the deal, not the city. Both parties honored the agreement until 2003. Until that time, the state had continued to send the fixed amount of revenue sharing to Detroit, and Detroit continued to lower it's income tax rate. In 2003, the state reneged on the promise to continue sending the agreed upon revenue sharing payment, and AS A RESULT, the city stopped lowering it's income tax rate.

The city should have mounted a legal challenge at that time, but for whatever reason, they did not. Instead, the city simply acted as if the deal was off, and stopped reducing the income tax rate.

I am assuming that the $220 million that the city claims that it is owed is the difference between the reduced amount of revenue sharing received by the city since 2003, compared to the guaranteed amount of revenue sharing that the city should have received under the terms of the deal. If the city had continued to honor their end of the deal by further reducing the income tax rate according to the terms of the deal, the argument that the state still owes the agreed-upon revenue sharing money would be very strong.

However, when the city failed to challenge the state's breach of the deal in 2003, and instead responded by simply breaching their end of the deal in kind, it is highly likely that a court would recognize this as a de facto agreement to end the deal on the city's part. When you add in the fact that the city waited nine years before they complained about the breach of contract, the city's legal position becomes even weaker. As one of the previous posters pointed out, the statute of limitations has probably run out anyway.

Having said all of that, the assertion claiming that "if Detroit could sue for lost revenue sharing, so could every other community in the state" is completely false and baseless.

The state adjusts revenue sharing every year, and there is no dispute that they clearly have the right to do so. The state did not agree to guarantee a fixed amount of revenue sharing to any local municipality other than Detroit, therefore all other local municipalities have no legal interest or standing in this matter.

[corktownyuppie]

Concerning the deal, it was the state that broke the deal, not the city. Both parties honored the agreement until 2003. Until that time, the state had continued to send the fixed amount of revenue sharing to Detroit, and Detroit continued to lower it's income tax rate. In 2003, the state reneged on the promise to continue sending the agreed upon revenue sharing payment, and AS A RESULT, the city stopped lowering it's income tax rate.

The city should have mounted a legal challenge at that time, but for whatever reason, they did not. Instead, the city simply acted as if the deal was off, and stopped reducing the income tax rate.

I am assuming that the $220 million that the city claims that it is owed is the difference between the reduced amount of revenue sharing received by the city since 2003, compared to the guaranteed amount of revenue sharing that the city should have received under the terms of the deal. If the city had continued to honor their end of the deal by further reducing the income tax rate according to the terms of the deal, the argument that the state still owes the agreed-upon revenue sharing money would be very strong.

However, when the city failed to challenge the state's breach of the deal in 2003, and instead responded by simply breaching their end of the deal in kind, it is highly likely that a court would recognize this as a de facto agreement to end the deal on the city's part. When you add in the fact that the city waited nine years before they complained about the breach of contract, the city's legal position becomes even weaker. As one of the previous posters pointed out, the statute of limitations has probably run out anyway.

Having said all of that, the assertion claiming that "if Detroit could sue for lost revenue sharing, so could every other community in the state" is completely false and baseless.

The state adjusts revenue sharing every year, and there is no dispute that they clearly have the right to do so. The state did not agree to guarantee a fixed amount of revenue sharing to any local municipality other than Detroit, therefore all other local municipalities have no legal interest or standing in this matter.

I stand corrected. I was misinformed and thought that Detroit was not the only entity who was promised revenue sharing from the state. I hate looking like an idiot but do appreciate that you laid out your understanding succinctly.

[professorscott]

I stand corrected. I was misinformed and thought that Detroit was not the only entity who was promised revenue sharing from the state. I hate looking like an idiot but do appreciate that you laid out your understanding succinctly.

...and as I said earlier, none of this makes any difference. If the State wants to pour some more money onto the City's financial bonfire, it can [[it won't) but that won't make any difference other than allowing the City to kick the can down the road for about another 20 weeks. Of course, the City has been kicking this particular can down the road for, probably, decades; but as one reporter wrote yesterday [[I'd cite it properly but I don't remember), there is no more can and neither is there any more road.

[downtownguy]

Thanks, erikd. That's the clearest explanation of this mess I have read yet. Since I rarely read the local dailies anymore, have they laid it out this succinctly? I'm guessing not.

[Wesley Mouch]

Thanks, erikd. That's the clearest explanation of this mess I have read yet. Since I rarely read the local dailies anymore, have they laid it out this succinctly? I'm guessing not.

Why is there no outrage against those who are saying that the State owes the City then?

If Snyder or Geo. Bush said what Watson or Bing were saying here, this forum would be branding them liars and chanting it hourly.

We should be holding all politicians accountable. Not just those we disagree with.

[downtownguy]

Which is why I asked if the dailies have reported the entire story. Seems to me they've been giving Bing a pass on a lot of issues so far.

[Novine]

"The state adjusts revenue sharing every year, and there is no dispute that they clearly have the right to do so. The state did not agree to guarantee a fixed amount of revenue sharing to any local municipality other than Detroit, therefore all other local municipalities have no legal interest or standing in this matter."

Sorry erikd but you're wrong. There is no "agreement" that would have given the city any legal standing to sue the state in 2003 or today. If you believe there is one, produce it. The only "agreement" or "deal" was an understanding between Engler and Archer that led to changes in the state laws governing income taxes and state revenue sharing and appropriations by the Legislature for state revenue sharing. Detroit had no more legal standing to challenge the change when the state stopped giving those amount than any other community in the state that receives state revenue sharing. If there had been a legal agreement in place, you can bet the city would have pushed to have it honored.

[Danny]

"Lawyer/Fox 2 legal analyst/WYXT morning host Charlie Langton is wondering the same thing."


Wondering about what? There was no legal agreement or contract between the state and the City of Detroit.

Wattrick said:


"Back in 1997, then-Governor John Engler and then-Mayor Dennis Archer struck a deal to ensure Detroit received guaranteed fixed revenue sharing payments. In exchange, the city agreed to gradually lower its income tax from 3% to 2% over ten years."


A deal doesn't equal an agreement or a legal contract. Ask anyone from Detroit or the city to show you any agreement or contract that covers this "deal". They can't and they won't because no such document exists.

What happened was the state laws governing the income tax and state revenue sharing were adjusted to reflect the "deal". Then a few years later, the city stopped lowering the income tax rate and the state cut the amount of revenue to all communities, not just Detroit. When that happened, no one claimed the "deal" had been violated. Only now are people claiming that some agreement exists that is being violated.

If Detroit could sue for lost revenue sharing, so could every other community in the state. But not one of them is suing the state because they know that the state has the authority to cut to statutory revenue sharing even if it harms local communities. It's bad enough that the uninformed are spreading this lie but it's pretty sorry that elected officials and those who should know better, like Charlie Langton, are perpetuating this myth.

That's what Andy Dillon said about the statutory revenue sharing proposal that went belly up due to loss of regional tax dollars with a combination of the nationwide housing crisis in 2008. Detroit still get 60% of the statutory revenue sharing, more than any other city in Michigan. It's a pity that most of the revenue sharing money goes to paying its bills to the debt collectors from the recent city bonds and constant lending 50 to 100 years ago. Detroit City Council should have gotten back over 220 million dollars from Lansing. However Detroit did not fill the end of its regional development and downtown infrastructure so no extra money for them. Detroit can't sue the state. Detroit City Government lost the case. Michigan State Supreme Court nor the U.S. Supreme Court will not answer their financial woes, doom and gloom. Bing and City Council are just going have to give in the emergency manager after April 1st. It would be the last attempt to keep Detroit from bankruptcy.

[Wesley Mouch]

...snip.... Bing and City Council are just going have to give in the emergency manager after April 1st. It would be the last attempt to keep Detroit from bankruptcy.

Why 'give in'? They should be welcoming her with open arms. The best results for the citizens should be the ONLY thing anyone is seeking. But since we expand government into all kinds of areas it doesn't belong, we therefore have 'spoils' to be divided -- and fights to control the machine.

[Danny]

Having an Emergency Manager in Detroit is like having Romulus Augustulus, the last Roman Emperor to surrender his laurel leaf crown to a German King Odoacer in A.D.476.

[corktownyuppie]

Having an Emergency Manager in Detroit is like having Romulus Augustulus, the last Roman Emperor to surrender his laurel leaf crown to a German King Odoacer in A.D.476.

There is one subtle but important difference. Detroiters get to vote for or against the governors in Lansing. In fact, Detroit only exists because of the state government, not in spite of it.

So while we're making analogies about foreign invaders, let's remember that Lansing is neither foreign nor invading.

[Wesley Mouch]

Having an Emergency Manager in Detroit is like having Romulus Augustulus, the last Roman Emperor to surrender his laurel leaf crown to a German King Odoacer in A.D.476.

Thanks for encouraging some classic education. We all could use more study of history -- certainly I do.

In Hamtramck, I thought it was insensitive [[although maybe unavoidable) to put a German in charge of a Polish city.

In Detroit, African-Americans might feel the same way about the Germans. Although I think Hitler hated the Poles more than Jews or Blacks. What he thought mattered little. They were all killed.

Today however, I welcome good German financial management. Perhaps Detroit could adopt the Euro. Angela Merkel might make a good mayor too. We'd at least have a woman executive.

[townonenorth]

Why is there no outrage against those who are saying that the State owes the City then?

If Snyder or Geo. Bush said what Watson or Bing were saying here, this forum would be branding them liars and chanting it hourly.

We should be holding all politicians accountable. Not just those we disagree with.

If Detroit gets their revenue sharing allegedly owed by the state, then every other municipality in the State of Michigan should get "their cash" too.