Detroit Has A Consent Agreement. What’s Next?

Spirit of Detroit. Credit: flickr user Urban Adventures.

After weeks of debate and sometimes raucous dissent, leaders in Detroit and Lansing finally signed off on a financial stability agreement for the city yesterday.

You can read the full agreement here. But as important as the agreement is, it doesn’t actually solve any of Detroit’s pressing financial problems. It merely lays out the structure and the powers of the new group that will.

So today is when the real work begins.

The Detroit Free Press reports today that the first step in the process is to hire 11 people. Mayor Dave Bing is in charge of finding the first two:

Mayor Dave Bing now has six days to create the positions of the city’s chief financial officer and program management director and 30 days after that to hire the people for the positions. Those holding the jobs must have experience in municipal finance and balancing the books of a government operation of at least $250 million. The candidate list and ultimate hires will have to be approved by Snyder and Bing.

The mayor, governor, state treasurer and city council will also each have a say about who goes on the nine-member financial advisory board that will oversee the city’s finances for the next few years.

Once the team is in place, the next big question is how to salvage Detroit’s finances. That’s where things may get ugly.

Sarah Cwiek, from partner station Michigan Radio, reports one of the biggest tasks will be to negotiate new contracts with the city’s unions:

They already agreed to give up historic concessions, only to have the state block final approval. Snyder says those agreements don’t go far enough.

Union leaders now say they’re in no mood to bargain. And they may have little recourse at this point but to strike.

Detroit’s new financial team may also face the difficult decision of whether to sell off city assets. The city is running an estimated deficit of more than $200 million, and Governor Rick Snyder says the state won’t offer up any cash to help fill the hole.

And there’s still a cloud of uncertainty hanging over the entire process, as legal challenges to the agreement work their way through the courts. There are challenges to the agreement itself, and challenges to Public Act 4, the state law that outlines what to do when a city faces a financial emergency. There are provisions in the agreement that say it’s still valid even if Public Act 4 is struck down. But a judge could just strike down those provisions.

Michigan Radio reports that Governor Snyder mostly dodged questions about the legal challenges during a media roundtable yesterday.

“I hope we can continue on this path, because I thought it was good, thoughtful legislation to begin with, and that we’re working in good faith to really make sure our communities are successful,” Snyder said.

Court challenge or not, the new team will have to work fast to fix Detroit’s problems. Estimates project the city will run out of cash completely by the end of June.

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