PONTIAC — Gov. Jennifer Granholm appointed an
emergency financial manager for the city of Pontiac after officials there
failed to abide by an agreement with the state to address its financial
disarray. Fred Leeb, a nonprofit consultant, was put in charge.
The state cited a number of factors when declaring
that the city was in a financial emergency. The city's cash reserves decreased
from more than $60 million in 2003 to less than $20 million in 2007,
and it has a general fund deficit of $6 million.
The mandatory personnel requirements of the city were
also cited as problematic, with the state saying they pose "a significant
limitation upon the ability of City officials to weigh competing budgetary
needs from one year to the next and to allocate scarce financial resources
The Mackinac Center detailed Pontiac's finances in its
winter 2007 issue of Michigan Privatization Report. It highlighted a number of
issues that an EFM may have to address. These issues included Pontiac's
then-decreasing cash position and a general fund that spent 68 percent on
police and fire expenses — meaning that addressing these major expenses would
result in a lengthy and uncertain binding arbitration process. MPR argued that
structural reforms were necessary, including selling city assets, privatizing
city public works services and contracting with local governments for police and
References: "Financial manager faces difficult task,"
The Oakland Press, Feb. 27, 2009
Correspondence between Gov. Granholm and Pontiac Mayor
Clarence Phillips, Feb. 20, 2009