Detroit Emergency Financial Manager Is "Sad But Necessary"

For Michigan, especially from a public relations standpoint, an emergency manager in Detroit is "sad but necessary" because of the city's inability to solve it's financial problems. That's according to Kelly Rossman-McKinney, the CEO of Truscott Rossman.

"What's important is the state has put into place a way in which cities can be cured of financial instability," said Rossman-McKinney. "When you are in financial ruin, there is no way to fix that problem without taking drastic measures, and those measures were taken."

Detroit's financial issues are being blamed mostly on declining revenues. Over the last 60 years the city has lost 1.1 million of its residents. Those residents all used to pay property taxes. Further compounding the issue, those property values have also dropped.

"Detroit can't wait. We need to solve real issues here today because citizens are not getting the services they really need and we have a financial crisis," said Governor Rick Snyder, as he declared Detroit a financial emergency. "This is the time for us not to argue or to blame, but to come together as Detroit, Michigan, not Detroit verses Michigan and bring all our resources to bare to say let's just solve the problem."

Adding to Detroit and other cities financial problems, in recent years the state has cut back on the amount of money it gives to cities. Cities are left with even less funding to solve their financial issues. This, while state law prohibits cities from increasing revenues by adding a sales tax, or raising property tax more than inflation.

An emergency financial manager does not mean state tax payers pick up the tab for Detroit's woes. No state funds are used to solve the problem although the state can provide more resources such as Michigan State Police officers to help the city.

An emergency manager can save the city money by renegotiating contracts and reducing employee payroll.

"I look at today as both a sad day, a day that I wish would never have happened in the history of the city but also a day of optimism and promise," said Governor Snyder. "This is the time to say there is a financial emergency in Detroit. I want to solve it. I want to help you solve it. Let's just work together to put a solution in place to say we can be on that path to be in a great place again--from midtown, downtown, the river front and the neighborhoods--so people can have a great quality of life."

"I think this is a great sign for businesses across Michigan and especially for those businesses in Detroit because they see a stabilizing force coming into the city," said Rossman-McKinney.

No one argues against the fact that getting Detroit back on its feet is good for the entire state, even if the process to get there is painful.

"Having a strong, vibrant Detroit is obviously critical to having a strong, vibrant Michigan," said Terry Stanton, the Director of Communications at the Michigan Department of Treasury. "The state needs Detroit to be a well-run city without a recurring general fund deficit that drains services."

After March 12, if the governor does appoint an emergency manager he or she will be there for at least 18 months. Under state law, after that the Detroit city council--through a two-thirds majority vote--could have the emergency manager removed.


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