Detroit Lawmaker Would Repeal City’s Post-Bankruptcy Financial Oversight – Michigan Capitol Confidential

Detroit Lawmaker Would Repeal City’s Post-Bankruptcy Financial Oversight – Michigan Capitol Confidential:

• Critic:‘Lawmakers shouldn’t act like the city’s problems are over’
• Several bills proposed by state Sen. Sylvia Santana would end state oversight of the city of Detroit’s finances, a condition that was part of a 2014 “Grand Bargain” bailout package designed to help pull the city out of bankruptcy.

...The 2014 bailout gave Detroit $195 million up front and authorized another $350 million over 20 years to ease its way out of federal bankruptcy court.
But to ensure the city did not resume the practices that caused insolvency in the first place, the Legislature imposed oversight of Detroit’s finances.

• Under the bargain, the state’s financial oversight would last 20 years, but Santana’s Senate bills 222 through 226 would formally terminate the oversight after just five years. 
• No longer would city financial decisions be reviewed by a nine-member commission comprised mostly of gubernatorial appointees and chaired by the state treasurer.
• ...Santana’s bills would also end state oversight of the Detroit Public Schools Community District.
• Additionally, the bills would repeal a provision of state law affecting the city and employee health insurance. That particular law requires municipal employees across the state to contribute specified amounts to their employer-provided health insurance benefits. Municipal governments can exempt their employees from these cost-sharing duties with a two-thirds vote by their governing body, but currently, Detroit cannot. Santana would let the city do so.
• Santana has also introduced a bill to let large cities, including Detroit, impose a 10 percent amusements tax on tickets to concerts, shows, sporting events, zoos and more. The proceeds would be used to prop up underfunded police pensions and retiree health insurance benefits.

James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, cautioned legislators about liberating Detroit from state financial oversight.
Among other reasons, he pointed to the 2018 conviction of a former Detroit employee for embezzling from the city.
Masharn Franklin had worked in Detroit’s audit and payroll department and was sentenced to 18 months in prison in November 2018 for embezzling $265,000.
...“Some of its elected officials and managers have been charged with corruption after bankruptcy.  ...But its residents deserve a competent and functional government, and lawmakers shouldn’t act like the city’s problems are over."
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