No loan for Detroit without turnaround plan: governor

Reuters News
Posted: Mar 09, 2012 6:34 PM
No loan for Detroit without turnaround plan: governor

By John D. Stoll

DETROIT (Reuters) - The state of Michigan has not received any request from Detroit for short-term funding to help the city avoid running out of money soon, the governor's office said on Friday.

But a spokeswoman for Michigan Governor Rick Snyder reiterated Snyder's view that the city needs a strong turnaround plan more than anything else. "Short-term cash infusions alone without a clear path to resolving this financial crisis will not work," said Geralyn Anne Lasher, the spokeswoman.

Even if Bing convinces Snyder to approve a loan, Detroit faces additional hurdles.

Ari Adler, spokesman for Michigan House Speaker Jase Bolger, said any appropriation of money for Detroit would need approval from the Republican-controlled legislature.

"It would be a hard sell to House Republicans to write a check to the city of Detroit without some stings attached in seeing some reforms made," Adler said.

He added that "there are daily stories breaking out of the city of Detroit about money being misused and a lack of accountability to taxpayers."

Amber McCann, spokeswoman for Senate Majority Leader Randy Richardville, said without a long-term solution to its fiscal problems, the Senate would not be able to rubber-stamp a loan.

"The city has had financial difficulties for quite some time and it needs a long-term sustainable solution rather than a influx of one-time cash," she said.

The Wall Street Journal reported earlier on Friday that Detroit Mayor Dave Bing could seek between $125 million and $150 million in short-term funding as the city looks to avoid running out of money before the middle of the year. Naomi Patton, a spokeswoman for the mayor, said that Bing "could" ask for "bridge funding from the state, but he currently "has no specific plans to request such funding."


In an email sent late Friday afternoon, the mayor's office sought to further clarify Bing's position on seeking financing.

Patton said in the email that Bing was asked by a reporter whether he would seek a bridge loan from Snyder and Bing said "that's possible."

When asked by that reporter how much he would like to ask for, Patton said Bing gave a range of $125 million to $150 million.

"The city continues to implement the financial restructuring plan the mayor announced in January to save $102 million this year and $258 million in 2013," Bing's chief of staff Kirk Lewis said in the emailed statement.

"The savings to keep the city financially solvent will be achieved through the plan, including the ratification of previously announced tentative agreements with the city's labor unions," he added.

Detroit City Council members have repeatedly criticized Michigan lawmakers for withholding hundreds of millions of dollars in revenue sharing they claim are owed to the city.

The critics point to that money as needed income for a city with its back against the wall. McCann pointed out that Detroit receives 50 percent of Michigan's revenue sharing, but represents only 7 percent of the state's population. Bing is under intense pressure to turn Detroit's finances around and has said the city has only enough cash to last until May. In recent months, he has sought deep concessions from city employees, vendors and other constituents, while also looking for ways to raise revenue. During his annual state of the city address on Wednesday, Bing asked state leaders to help him in his effort to get concessions. The city in recent weeks has reached tentative deals with some of its 48 public employee unions. Snyder inserted himself more deeply into Detroit's turnaround effort late last year when he appointed a team to review the city's finances and make a recommendation on whether an emergency manager is needed. A decision on an emergency manager is due at the end of March. "The governor remains committed to working with the city and city council to address the short-term and long-term financial issues," Lasher said on Friday. "However, there must be a solution to the city's financial troubles and it has to be sustainable so we don't find ourselves in this same situation down the road."

(Additional reporting by Karen Pierog; editing by Dan Grebler, Gary Crosse)