Relevance of Detroit officials in manager's hands

AP News
Posted: Mar 15, 2013 5:50 PM
Relevance of Detroit officials in manager's hands

DETROIT (AP) — What role Detroit's elected leaders will play in the city's fiscal crisis is now up to a Washington, D.C., lawyer appointed by the governor to turn things around.

Detroit's emergency manager, Kevyn Orr, says he wants to work with the City Council and the mayor, though many in Detroit see the state takeover as stripping away the voice of the people to have their elected leaders lead.

"I'd like to have full partnership with the council and their staffs," said Orr, a 1983 University of Michigan Law School graduate who resigned from the international Jones Day law firm to take the emergency manager job. Orr was the turnaround expert who represented Chrysler during its successful restructuring.

"I don't see it as being a punishment in terms of if you don't help me things are going to happen," he said Thursday in Detroit. "I will say this ... everything is on the table. But it's going to be driven by the data and by the need, not by necessarily punitive behavior."

Gov. Rick Snyder appointed Orr to the job on Thursday, making Detroit the largest city in the country to fall under state oversight. Orr starts work on March 25, taking over the finances of a city with a budget deficit of more than $300 million and long-term debt of more than $14 billion.

Mayor Dave Bing has been frustrated in his efforts to restructure the city's finances by labor conflicts with municipal unions and head-butting with the council. The city has been making ends meet with the help of bond money held in a state escrow account. The city has also instituted mandatory unpaid days off for many city workers.

The emergency manager will have much greater control over spending. Michigan law gives them the ability to singlehandedly renegotiate labor contracts, sell off assets and even suspend elected officials' salaries.

That means that although Orr can't yank elected leaders from office, he does have say-so over their pay and budgets — a power other emergency managers have used.

"They don't need the same budgets. The staff is going to get cut first," said Dr. Carla Scott, a Detroit pediatrician who served two terms on the Detroit School Board.

Scott was on the school board in 2009 when then-Gov. Jennifer Granholm appointed Robert Bobb as the district's emergency financial manager. Board members only received $30 per meeting stipends. Bobb didn't allow them to have input in anything tied to district finances "because he controlled all the money," said Scott.

"A lot of the decisions the board made were tied to money," she said. "Some people took the attitude 'we're here; let's try to make it work.' He was very clear that he wasn't really willing to work with the board."

Snyder in 2011 appointed a replacement for Bobb. The district is one of three in Michigan under state control.

Detroit joins Pontiac, Ecorse, Benton Harbor, Allen Park and Flint as other Michigan cities with emergency managers.

Flint's council saw its compensation package drop from about $25,000 to $7,000 under an emergency manager.

"We met once a month with them," said Michael Brown, current city administrator and emergency manager for nearly a year beginning in late 2011. "They didn't function as a body that passed ordinances or had a legal function. They were still responding to constituent services and bringing those things to us."

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Orr has 18 months to get the job done in Detroit. He said Thursday that the task and timeline are doable.

Bing has pledged support from his administration and referred to Orr's presence as a "partnership."

Louis Schimmel, appointed by Snyder in 2011 as emergency manager of Pontiac, north of Detroit, said Orr has to be clear on who the boss will be, which could mean ignoring Detroit's elected leadership.

"The mayor and City Council in Detroit will have to be invited to be part of the solution, and if they're not invited to be part of the solution they should be put aside," Schimmel said.

Councilman Andre Spivey said in a statement that he is "willing to work together" with Orr, Bing and Snyder.

"As a council, we fought until the very end in hopes that democracy would prevail," Spivey said. "The reality is a financial emergency does exist and the time has come for all parties to unite and embrace this new concept of governance in order to properly correct many of the financial wrongs that have plagued this city for decades on end."

Regardless, Schimmel said, changes are coming.

"You have a city that's on the edge of the cliff and you need to put together a really solid team that replaces what's there," he said.