Bloomberg News

Michigan Appeals Detroit Finance Review Team Meeting Bar

April 03, 2012

Michigan officials appealed a state court order barring a Detroit financial review team from meeting to discuss a possible plan to address the city’s fiscal crisis, asking for immediate consideration.

Judge Joyce Draganchuk of Ingham County Circuit Court yesterday issued a temporary restraining order stopping the team from meeting after union official Robert Davis claimed the review board’s term of office expired last month. The team canceled a scheduled meeting this morning.

Michigan Attorney General Bill Schuette asked the state’s Court of Appeals to put Draganchuk’s order on hold by tomorrow or reverse it. The review team’s authorization hasn’t expired and blocking meetings will harm resolution of the crisis, Schuette said.

The order barring further review team meetings “effectively” gives Michigan Governor Rick Snyder only two options -- “appoint an emergency manager or do nothing,” Schuette said in the 10-page appeal. Draganchuk “fundamentally misunderstands” the effect of her order, he said.

The Ingham County suit is one of three pending court challenges to the Detroit financial review team brought by union officials. A federal judge in Detroit today is hearing a request from a coalition of municipal workers for a restraining order blocking Snyder and the city from entering into an agreement over Detroit’s fiscal crisis.

Open-Meetings Law

Davis, in a separate suit, previously claimed the review team was breaking Michigan’s open-meetings law by conducting business in private. Ingham County Circuit Court Judge William Collette last month ruled the team had to hold public meetings. His separate order barring the review team from entering into an agreement was reversed by the Michigan Court of Appeals.

Davis asked the Michigan Supreme Court to review that reversal. His request is pending.

The governor appointed the team in December after a preliminary study found the city was in “probable financial stress.” The group is considering whether Detroit, Michigan’s largest city, needs an emergency manager.

Detroit, the home of General Motors Co. (GM:US), the world’s largest automaker, may have a $270 million deficit by the end of June, according to a city council report in February.

State Treasurer Andy Dillon said Detroit’s cash will run out in May. Detroit and Snyder have until April 5 to agree to a recovery proposal, or the governor can name an emergency manager with sweeping powers over municipal finances and operations.

‘Financial Crisis’

“The City of Detroit is facing the most significant financial crisis in its history,” Schuette said in today’s appeal. The city has “only $1 in assets for every $33 in liabilities,” he said.

Draganchuk has scheduled an April 11 hearing to consider the Davis challenge to the review team’s authority.

The Ingham County lawsuit is Davis v. Detroit Financial Review Team, 12-315-CZ, Circuit Court, Ingham County, Michigan. The federal case is Valenti v. Snyder, 12-cv-11461, U.S. District Court, Eastern District of Michigan (Detroit).

To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net.


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