Michigan appoints financial review team for Detroit

DETROIT (Reuters) - Michigan Governor Rick Snyder on Tuesday appointed a financial review team for Detroit, the latest development in a process that could lead the city to file for biggest-ever U.S. municipal bankruptcy.

"Given the financial crisis that continues to grip the City of Detroit, we must move quickly to ensure city residents have continued access to essential services they expect and deserve" Snyder said in a statement.

Frustrated by the slow pace of fiscal reforms and worried by Detroit's long-term outlook, state official earlier this month launched a state review.

Last week, the first part of the process - a preliminary review of Detroit's cash-strapped finances - was completed in just four days and concluded in a report that the city had "a serious financial problem."

The report said that "due to financial reporting problems, city projections change from month to month making it difficult to make informed decisions regarding its fiscal health."

"A cash flow estimate in August, 2012 projected a cash deficit of $62 million by June 30, 2013, but estimates for October and November projected deficits of $84 million and $122 million respectively," the report said.

That opened the door to a deeper look into the city's financial conditions.

The financial review team appointed on Tuesday includes State Treasurer Andy Dillon, Auditor General Thomas McTavish and two members of the financial advisory board, Ken Whipple and Darrell Burks.

The team will conduct a new review that could culminate in the appointment by the governor of an emergency financial manager. Such a emergency manager would have the authority to allow the City of 700,000 to file for protection from creditors under Chapter 9.

Detroit has been hit by a steep population decline, years of severe budget deficits and escalating employee costs, all of which led state officials to begin an intervention process last year.

Mayor Dave Bing set a media conference for Wednesday to discuss his restructuring plan for Detroit.

"My administration will continue to focus on my restructuring plan, in cooperation with the city council, to hopefully eliminate the need for an emergency financial manager," Bing said. "We strongly feel that the review team will not find anything different in the city's financial condition from what we have previously revealed to the state."

A new bill approved last week by the Michigan Senate and House, which gives fiscally troubled local governments options to achieve solvency, has no immediate impact on Detroit. If it is signed by Snyder, it would not take effect until March.

(Reporting by Tiziana Barghini; Additional reporting by Bernie Woodall; Editing by Greg McCune, Christopher Wilson and Lisa Shumaker)

Source: http://news.yahoo.com/michigan-appoints-financial-review-team-detroit-043457875.html

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