State expected to start review of Detroit finances

DETROIT (WXYZ) - The state says it may need to take more control in the city of Detroit to prevent financial ruin.

State Treasurer Andy Dillon spent hours at Detroit City Hall Wednesday. He spoke to the mayor and city council members. 

He warned them that the city’s financial condition is at a point where the state may need to take action to prevent the situation from getting worse.

The State Treasurer’s Office next week is likely going to start a review of the city’s books. That review will take about 30- 40 days. 

The conclusion of that review will determine whether the city needs an emergency financial manager.

"We want to work with them," said Dillon. "Just because we are initiating a review, it doesn’t mean it is a take over. I'm here to meet with the mayor and council members to say can we do this together.  It doesn’t have to be confrontational. It can be a partnership."

Detroit Mayor Dave Bing released this statement to 7 Action News Wednesday afternoon:

“My Administration has had discussions with the State regarding an Emergency Financial Manager previously.  Until the State makes a final determination, I will continue to implement my Restructuring Plan on behalf of the citizens of Detroit.”

Wednesday morning, Detroit City Council members met and voted to approve an amendment to the city's budget.  The amendment will allow the city to pay almost $30 million to city pension funds. The money is owed, but somehow it was forgotten when the budget was put together.

State Treasurer Dillon tells 7 Action News that mistake is one thing that changed the financial position of the city, and lead to the state review.

"During the past 36 months in office we've had the tools and the capacity to repair our fiscal house and restructure city government, but not the political will," said Councilman Gary Brown.

He says he does not want an emergency financial manager in power, but does want council to come together to make tough changes fast.

"I am certainly not in favor of an emergency manager, I think that the consent agreement is working and can work if city leaders...will make the tough political decisions," said Brown.

Union officials tell 7 Action News the administration could have been saving millions of dollars if they had just implemented cost saving measures.

"This administration as well as the governor have been grasping for straws, they have not fixed the problem and I think that's evident by you brought a CFO, an... advisory board, a program manager and you're still $40 million in the hole" said Edward McNeil, AFSCME Council 25.

Detroit union officials say some of the outstanding revenue still out there that would help the bottom line include $70 million in code violations for 2012, and also for 2012-- $212 million in income taxes.