DETROIT, Dec. 27 (UPI) -- The state of Michigan Tuesday named a 10-member blue-ribbon panel to review Detroit's finances.
Michigan Gov. Rick Snyder said in a statement the committee members are "the right mix of expertise and backgrounds to tackle this very challenging job and ensure a thorough, objective, and fact-based review," the Detroit Free Press reported.
The committee is comprised of state Treasurer Andy Dillon, former state Supreme Court Chief Justice Conrad Mallett, former Detroit police Chief Isaiah McKinnon, retired Wayne State University President Irvin Reid, Internal Audit Services Director Doug Ringler, accounting firm founder Jack Martin, Marygrove College President Emeritus Glenda Price, New Detroit President Shirley Stancato, state Local Government Services Bureau Director Frederick Headen and state Treasury Department senior policy adviser Brom Stibitz.
The committee has 60 days to report back on the city's financial situation. Its findings could lead to the appointment of an emergency manager to take control of the city, or city officials could be given more leeway to get the city's finances squared away, the Free Press said.
The formation of the committee came after a preliminary review by the state found the city has failed to come up with an adequate plan to deal with recurring fund deficits, WDIV-TV, Detroit, said.
Snyder said his administration will continue to work "collectively and collaboratively" with Detroit Mayor Dave Bing and city officials.
"The mayor, city council and stakeholders are making some important progress in developing a viable financial recovery plan for the city, but given urgent and time-sensitive financial issues facing Detroit and the need to ensure critical services continue to be provided to city residents, the next step simply necessitates the appointment of a financial review team," the governor said.
Bing pledged cooperation with the review team and the state process.
"At the same time, my staff and I have worked through the holiday break with union leadership on my plan that seeks savings of $102 million for this fiscal year and $258 million in fiscal year 2012-13," Bing said. "We will continue to negotiate until we reach agreement to resolve the city's financial crisis."
Retired U.S. Bankruptcy Judge Ray Graves suggests Detroit choose a path other court protection, saying that would cost "tens of millions of dollars in legal fees," The Detroit News reported Tuesday.
"I'll guarantee you this: It's not going to be a quick in-and-out of bankruptcy that we saw with GM and Chrysler. That's not going to happen," he said.
In Michigan, a financial emergency plan for counties and municipalities that passed into law in March allows the governor to appoint an emergency manager to take over a local government's finances if solutions prove elusive.
If an emergency manager is appointed, he or she would have the authority to tear up contracts with unions and would be the only one who can file for bankruptcy on a city's behalf.
"This emergency manager law is really set up to accomplish what you can do in bankruptcy without having to file for bankruptcy," said Brad Coulter, a municipal turnaround expert at O'Keefe & Associates Consulting. "That's how you would do it the proper way, versus fighting until the end until you have no choice but to do an EM or file [Chapter 9]."
For now, the governor's office, the state Treasury Department and Bing's office are refusing to speculate on whether Detroit, with $12 billion long-term liabilities, would actually be forced to file for court protection.
Currently, the mayor is seeking concessions with each of the city's 48 unions, the News said.
"As Mayor Bing has repeatedly said, the remedy for the city's financial crisis is his plan that seeks $102 million in savings for this fiscal year, including structural reforms in healthcare and pensions, layoffs and other cuts," said Bing's chief of staff, Kirk Lewis.
"Speculating on worst-case scenarios … is not productive nor is it something we're focused on," he said.
