Friday, June 01, 2012

Detroit Legal Department to Pursue Declaratory Judgement on 'Financial Stability Agreement'

Detroit Mayor Dave Bing says it's time for city to move forward and not let legal process slow down agreement

June 1, 2012
Detroit Free Press

MACKINAC ISLAND -- Despite a likely legal challenge of its consent agreement with the state, the City of Detroit appears ready to move ahead with a new, smaller budget and a financial advisory board to stave off bankruptcy or the appointment of an emergency manager.

Speaking Thursday on the final day of the Detroit Regional Chamber's annual Policy Conference, Mayor Dave Bing said "my administration fundamentally agrees with City Council's recommendations for the 2012-2013 budget," which reduces the city general fund by $246 million and calls for privatizing public lighting and transportation.

Meanwhile, council leaders said a vote was expected next week on naming the last two members to the financial advisory board, even while the city's top lawyer explores the legality of the agreement the city signed with the state on April 4, creating the board.

"I believe," Bing said, "this budget is a key indicator of our efforts to collectively transform Detroit and will help to spearhead our efforts to improve core services and the overall quality of life of Detroiters."

The $1.12-billion spending plan for the fiscal year that starts July 1 calls for Detroit's human services department and 2,600 city jobs to be eliminated.

Under the consent agreement, the budget must meet the approval of the yet-to-be seated financial advisory board, which is made up of appointees by the governor, mayor, state treasurer and the council.

The council has refused to appoint its two members because the city's top lawyer is expected to file a legal challenge of the consent agreement. Earlier this week, Gov. Rick Snyder told the Free Press that the board should start meeting, with or without the council's appointments.

City Council Pro Tem Gary Brown said a majority of council members want Krystal Crittendon, head of the city's Law Department, to file a lawsuit requesting a declaratory judgment against the consent agreement, but also do not want to hold up the process anymore waiting on a legal opinion.

"We have excellent candidates to add to the team of the financial advisory board, and we need to get them seated as quickly as humanly possible," Brown said, speaking to the Free Press on Mackinac. "We can't afford to waste any more time. Even if they were successful in the lower court, it would obviously be taken to the Appeals Court and the Supreme Court. We don't have time to wait for all of that to go on. We have to move forward."

Crittendon and other city officials met Tuesday with state Treasurer Andy Dillon and Snyder's representatives to discuss Crittendon's May 11 opinion that state law and Detroit's city charter invalidate the consent deal because they prohibit the city from entering into contracts with entities that owe Detroit money.

Crittendon's argument hinges on $224 million in state revenue sharing the city says it is owed, in addition to an unpaid $4.75-million water bill at the Michigan State Fairgrounds in Detroit. Snyder and Dillon have said Detroit will not get the revenue sharing and the state also disputes the water bill.

Bing said he, too, wants the council to appoint the final members of the nine-person advisory board.

"I don't want to see us get sidetracked by litigation at this point," Bing said. "I think the council and myself are determined to make sure we follow the letter of the law, but at the same token that's going to be something that will sidetrack us and keep us from moving our plan forward."

Councilman Kwame Kenyatta, who opposed the consent agreement, said it's wrong of Snyder to not honor the state's commitment to pay revenue sharing to Detroit by saying the deal was made with a previous state administration.

"That's like saying we're going to sign this consent agreement, but the next council that comes in won't have to be held to it," Kenyatta said. "We know that's not true."

Still, Kenyatta said, the disputes over the consent agreement and the state's emergency manager law shouldn't stop city officials from trying to move forward on a deficit-elimination plan.

"You continue to try to work on the problems the city is having," Kenyatta said.

Councilman Ken Cockrel Jr., meanwhile, said he was "encouraged" by the smooth budget process.

"I would like to see us move forward, frankly, on appointing our people to the financial advisory board. I know that there are a number of other council people who have concerns with that ... but I think we need to get past that as quickly as possible," he said.

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