Setback for Pontiac's emergence from state control: Board rejects City Council budget proposal


We also have more stories about:
(click the phrases to see a list)

Subjects:

Places:

 


PONTIAC, Michigan — A state board overseeing Pontiac's finances rejected the City Council's first budget proposal in years because of how it would finance retiree health insurance costs.

The Pontiac Receivership Transition Advisory Board on Wednesday postponed a vote on the $29 million budget for 2015-16. Mayor Deirdre Waterman presented the budget, and the City Council passed it June 5. Former state-appointed Pontiac financial manager Lou Schimmel is vice chairman of the transition board.

Schimmel said he objects to a proposal to use a measure called a 420 transfer to cover Pontiac's $13 million liability for retiree health costs, The Oakland Press reported (http://bit.ly/1pNhUVs ).

He said the deal could leave the Detroit suburb of 60,000 residents with a big debt if the municipal pension system fails to generate enough revenue.

"The city would be on the hook for the remaining amount, which would very likely ... either result in a bankruptcy or a huge increase in taxes for the City of Pontiac," Schimmel said. "For those reasons, I can't approve it."

The city operates on a two-year budget cycle, and the budget under consideration takes effect July 1, 2015.

Mayor Waterman said the concern is unwarranted. She said she fulfilled her duty by sending a balanced budget to the council and that she addressed the concerns about the viability of the 420 transfer proposal at the time. In any case, the transfer is intended as a placeholder until a permanent system is in place for funding retiree health costs, she said.

Pontiac came under state control in 2009 and began the move toward self-government last year.


Information from: The Oakland Press, http://www.theoaklandpress.com

All content copyright ©2014 Daily Journal, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Click here to read our privacy policy.