State begins financial review in LP

Sunday Times Newspapers

LINCOLN PARK — “This starts the clock,” Mayor Thomas Karnes said of a state-ordered review of city finances. “We’re under the microscope.”

The appointment last week of a review team officially began a study of municipal budgets. State reviewers had 60 days from Monday’s appointment to complete their study and make a recommendation for how best to resolve the city’s budget deficit. The process began last summer, when city officials requested the review. By fall the city had presented a five-year plan for eliminating a deficit that is expected to be about $1 million when the fiscal year ends in June.

At the end of the 60-day review — barring a requested 30-day extension — financial reviewers are expected to make recommendations for fixing the shortfall. Among the options are the appointment of an emergency manager, a consent agreement under which the state would oversee the city’s financial decisions, or bankruptcy.

Karnes said he wasn’t certain what to expect, given the recent strategy of state takeover in cities as close as Allen Park. Although the more severe surrendering of local authority may still be possible, Karnes said he didn’t expect any overnight or drastic changes.

“An emergency manager is not coming in tomorrow,” Karnes said. “They will make their recommendations, and there will be discussions between us and the state.”

Karnes understood that the city was in “probable financial distress,” as determined by state advisors in December, and that elected officials last year had good reason to seek state assistance. On the other hand, labor agreements, legal settlements and other cost-saving and revenue generating measures large and small that resulted in a somewhat more optimistic outlook. Contracts with two police unions remained pending, which could further strengthen the city’s finances if concessions are accepted.

“We’re a little different city than when this started,” Karnes said. A recent Plante & Moran audit of city finances revealed a number of improvements, and Karnes said he looks forward to what the review team discovers.

“The wheels are moving forward,” Karnes said. “There is a group here already doing two-year projections on cash flow and five-year projections on everything else. That’s part of the process. We’re under the microscope, but that’s all right. We’re an open form of government.”

Karnes said city hall staff has made space available and was ready to cooperate with the review team, comprised of Department of Treasury Office of Internal Audit Services administrators, school board consultants and others experienced in municipal budget management.

“The only thing we’re trying to do is make Lincoln Park a better place to live,” Karnes said. “We have to get through the financial distress. These people have a job to do and we hope to be a better city as a result of their recommendation.”

(James Mitchell can be reached at