Gov. Rick Snyder appointed an emergency manager for Lincoln Park, which has
struggled with deficits and rejected an agreement to bring its finances under control.
Four other Michigan cities and three school districts, including Detroit and its schools,
are under state-appointed emergency managers. A 2012 law gave emergency managers
broader authority, including the power to nullify union contracts. The law gives
distressed cities and school districts more choices to address fiscal crises, including
bankruptcy.
Snyder named Brad Coulter, a Detroit-area finance consultant, to oversee the Detroit
suburb of 37,000, which, like other Michigan municipalities, has been squeezed between
the cost of employee pensions and falling property-tax revenue to pay for basic services.
Coulter is an independent contractor for O’Keefe & Associates, a turnaround consultant
in Bloomfield Hills. He has 25 years experience in corporate finance and restructuring,
according to a release from the state Treasury Department.
“I know Brad will work collaboratively with city officials to address the financial
emergency and to ensure Lincoln Park residents receive the critical services they expect
and deserve,” Snyder, a 55-year-old Republican, said in the release.
The city diverted $2.5 million from water and sewer funds to prop up pensions in fiscal
2013, according to an April state report. The pensions were only 28 percent and 34.6
percent funded, and retirement health care was underfunded by more than $100 million,
according to the report. Standard & Poor’s in December cut the city’s debt rating seven
steps to two levels below investment grade.
The city must find a way to raise property values to increase revenue long-term, Coulter
said in a phone interview. “It can’t be a 100 percent cost-cutting exercise,” he said, added
that rising retirement costs must be constrained.
The Lincoln Park City Council in May rejected a state consent agreement that would
have given a new manager power to create a deficit-reduction plan, including the ability
to restructure government, terminate union contracts and honor debt obligations. It’s
better to let the state appoint its own manager with more experience, said Councilman
Tom Murphy, who opposed the deal.
“A state manager knows how to get things done and save money, and that’s what we
need,” Murphy said in a phone interview.
Although Lincoln Park adopted a balanced budget for its fiscal year beginning July 1, it
will create a deficit of “a couple million dollars” by next year, said City Attorney Ed
Zelenak.