eGnus. Severe municipal distress and the task of sorting roles of governance are hardly unique to the U.S. Two years ago, a report in South Africa listed at least 64 municipalities on the financial distress list: “From evidence to date, it is clear that much of local government is indeed in distress, and that this state of affairs has become deeply rooted within our system of governance.” The assessment, carried out in all nine of the nation’s provinces, found that there was an overall vacancy rate of 12% for senior managers in local government. The assessments were designed to ascertain the root causes of distress in many of the country’s 283 municipalities in order to inform a national turn-around strategy for local government. Insufficient municipal capacity due to lack of scarce skills was one of the department’s main challenges, along with poor financial management, corruption, and service delivery delays. The report found that skills scarcity was deepened by the decline of municipal professional associations and poor linkages between local government and the tertiary education sector: “Functional overreach and complexity are forcing many municipalities into distress mode, exacerbated by the poor leadership and support from other spheres and stakeholders.” The report found that the distressed municipalities lacked financial and human resources to deliver on their mandate and citizens’ expectations. Continue reading


Temporary Hiatus. The eBlog will be temporarily suspended whilst its writer returns to Africa. Years ago, he served as a Peace Corps volunteer in Juba, now known by its new name South Sudan. The eBlog writer will visit Zambia, Botswana and South Africa–the latter of which is experiencing its own issues with severe municipal fiscal distress…. In the nonce we wish you a good holiday honoring so many who have served the nation with their lives.


“I hail from southwest Michigan, but today I stand with Detroit and its path back to prosperity…By settling Detroit’s bankruptcy, we save taxpayers billions of dollars. If we don’t, we could be on the hook for a lot of money.”

~ Michigan state Rep. Al Pscholka, R-Stevensville.


Motor City Recovery & Future. The Michigan House yesterday voted overwhelmingly to pass and send to the Senate the 11-bill package to provide oversight and a critical state contribution to help the City of Detroit emerge from bankruptcy. The legislation also authorizes a $195 million state contribution toward the city’s underfunded pensions.The special package governs everything from how the money will be transferred to setting up an oversight commission that will have control of the city’s finances, budgets and contracts for at least 13 years. Gov. Rick Snyder, who first proposed the aid package in January, urged the state Senate to quickly move on the package, noting the overwhelming support it received in the House: “It’s important for them to look at all the margins these passed…I would encourage the Senate to move promptly. It would be helpful to get it done quicker because people are voting…This settlement will allow us to more quickly resolve the bankruptcy issues, and create a solid, sustainable fiscal foundation to support Detroit’s continuing turnaround…Detroit is an important part of Michigan’s identity…Let the city’s resurgence show the world that Michiganders are standing together and growing stronger as we accelerate our continuing comeback.”   Continue reading


Motor City Recovery & Future. Responding to Michigan House Speaker Jase Bolger’s request for unions to contribute to Detroit’s recovery, the United Auto Workers yesterday became the second to agree to contribute to the grand bargain — the same day on which the special committee in the legislature unanimously forwarded the 11-bill package to the full House for a vote as early as today. The UAW announced it would “help raise material contributions toward the health care costs for Detroit’s retirees,” according to U.S. Judge Gerald Rosen’s office. Emergency manager Kevyn Orr’s office commended the UAW for its help in “stepping up to help strengthen pensions and put the city on a quicker path to solvency.” In making its pledge, the UAW would become the latest group to pledge to join with the Governor, state legislature, philanthropic foundations, and the Detroit Institute of Arts to raise millions of dollars to seek to ensure that no retiree is forced into poverty and protect the world famous museum from liquidation. Continue reading


Motor City Recovery & Future. After adjourning its hearing yesterday, the Michigan House Committee on Detroit’s Recovery and Michigan’s Future could act as early as today to report its pending 11-bill package, including an amendment by which the Detroit City Council president would have a seat on a state commission with broad oversight of the city’s finances. The sense of momentum, moreover, was bolstered yesterday with the announcement by U.S. Judge Gerald Rosen, appointed by Judge Steven Rhodes to act as chief mediator in Detroit’s Chapter 9 case, announced that the Michigan Building and Construction Trades Council has pledged $3 million to $5 million to the city’s retire health care benefits. Continue reading


Motor City Recovery & Future. The Michigan House Committee on Detroit’s Recovery and Michigan’s Future  voted unanimously today to authorize a $195 million state contribution to help shore up the Motor City’s pensions and outline post-bankruptcy oversight for the next 20 years, sending the 11-bill package to the full House—which could act as early as tomorrow. The special committee Chair, Rep. John Walsh, made clear: “We still have plenty of work to do.” In reporting the bill, the committee adopted a number of amendments, so that, as reported, the provisions would expand the state oversight board—which would oversee Detroit’s recovery for at least 20 years―to nine members instead of seven, and provide the Governor with two appointees and the Detroit City Council with one. Continue reading


The Straddle. The Detroit Police Officers Association (DPOA) has filed an objection to the Motor City’s proposed plan of adjustment, stating that the union and its members “stand squarely on both sides of the feasibility issue,” with the union’s attorney noting: “On the one hand, they strongly support the city’s restructuring efforts to aid them in their ability to provide the city’s residents, businesses and visitors with more effective police protection…On the other hand, the DPOA’s members are creditors of the city, who, as a result of the freeze on their accrued pension benefits and the proposed new (Police and Fire Retirement System) pension formula, face additional and significant cuts to their pension benefits—a critical condition of their employment, since city police officers lack the protection of Social Security for retirement or disability.” Continue reading