$28-million in revenue for Detroit could be withheld

DETROIT (WXYZ) - The governor and state treasury are firing another warning shot across Detroit’s bow – back off on the lawsuit or $28-million in revenue sharing money could be withheld.

A spokesman for the treasury department says the state is not making this threat, that a trustee in charge of managing Detroit’s recent bond deal ultimately makes the decision about the pay out.

As the spokesman explains, the trustee may have to withhold the money in order to pay off the bonds if there is a threat of a lawsuit.

As for Mayor Dave Bing, his office released a statement late Thursday night that reads in part:

“This is exactly the negative financial outcome and potential harm to the city we’ve been working to avoid and why I went before the City Council attempting to get their support to remove the Corporation Counsel…”

The mayor wanted council to remove Crittendon after she refused to back down on a lawsuit filed on behalf of the city arguing the consent agreement with the state was unlawful.

Crittendon claims she was obligated to file the lawsuit because Detroit had no legal standing to enter into an agreement with the state when the state owed Detroit money. The consent agreement gives considerable power to the state over Detroit.

Crittendon’s suit was tossed out by a judge two weeks ago, but Crittendon has until next Thursday to decide whether to file an appeal or a motion for reconsideration.

She has not said yet what she will do.

The immediate impact of revenue sharing money being withheld is not clear. The mayor’s office told Action News late Thursday night the city could make payroll.

Stay with WXYZ.com and Action News for the latest on this developing story Friday.