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When Detroit officially emerged from bankruptcy last Dec. 10, Mayor Mike Duggan pointedly set a goal of exiting state financial oversight in as little as three years.

City Council President Brenda Jones agreed, repeatedly. She accepted the necessity of a court-approved restructuring plan, even as she embraced a widely shared sentiment among Detroiters that elected officials should be in complete control as soon as possible.

Yet that goal, a marker of the city's return to full self-government, could be endangered by the City Council's decision last week to reject a hike in water rates. The move would blow a $27 million hole in its already approved and balanced budget, potentially triggering a review by the state-appointed Financial Review Commission that could start the three-year clock ticking all over again.

In a July 2 letter to the mayor and council, obtained by The Detroit News, state Treasurer Nick Khouri says the commission he chairs is "statutorily required to provide oversight" of the city's finances. He wants "the necessary information to demonstrate the city's plan to comply with the approved budget ... or the basis upon which the city will seek an amendment to the Fiscal Year 2016 budget. We would appreciate an immediate response."

What this issue, crystallized by the letter, reveals depends on who's doing the looking. For council members and Detroiters bothering to pay attention, the prospect of a financial review shows that political posturing frequently practiced at the council table can exact a high cost if it fouls agreements dictated by the bankruptcy restructuring plan.

Should Detroit do what it says it will do, as Duggan has repeatedly vowed to do, the city could exit state oversight within three budget years. Should its leaders revive the political antics that helped speed the collapse into Chapter 9 bankruptcy, the state is empowered to reimpose discipline on the city by ordering a review and beginning the process all over again.

For wary suburban officials and state lawmakers, the prospect of a financial review demonstrates that enabling state legislation and U.S. Bankruptcy Judge Steven Rhodes' confirmation order have enough teeth to ensure wise financial decision-making in Detroit — even if politicking inside council chambers may not.

That has value all its own. Where cynics may regard Detroit's epic bankruptcy as a brief detour in an otherwise decades-long arc of decline — and see the water-rate vote as proving those suspicions — optimists can see in the safeguards an effective mechanism to check risky financial decisions that can mushroom into major headaches.

Council's 6-2 vote rejecting the rate hike, which could be reconsidered as early as Tuesday, "came as quite a surprise, as council had previously approved the operating budget," said Robert Daddow, deputy executive for Oakland County and chair of the Great Lakes Water Authority.

"I would expect this particular item has caught people's attention. They didn't help matters at all in the suburbs, undoubtedly. If they ultimately clean this up, it indicates there is teeth to this effort."

Exactly. Doing so also indicates that suburban skeptics, including the likes of Macomb County Executive Mark Hackel, can rest a little easier because the tools built to maintain Detroit's fiscal promises are showing signs of working — not enabling a return, this soon, to bad, old habits.

Detroit's bankruptcy would be an enormous waste of time, money and unparalleled cooperation between the public and private sectors, foundations and state legislators, unions, retirees and pension funds, if the city's leaders choose grandstanding over financial discipline.

And it is a choice. Last week's water-rate vote revived, yet again, the false choice between raising the revenue needed to keep the system running and whether some Detroiters can afford a 7.5-percent increase that amounts to about $64 more annually or $5.33 per month.

Activists can harangue council. They can invoke the United Nations. They can lobby sympathetic news media to highlight, once again, department plans to end service to customers who refuse, for whatever reason, to pay their bills. None of that changes the economic realities of operating a system that provides water to nearly half of Michigan's population.

Myriad programs exist to help needy residents pay their bills, a point city officials make repeatedly. Withholding rate hikes, ostensibly to help those with ready access to assistance, has the perverse effect of levying even higher costs on those in Detroit who can pay and, second, beggaring a system badly in need of operating revenue.

Arguing that water is "a human right" ignores the fact that municipal water doesn't come free. It costs money for plants and equipment, to pay wages and offer benefits, to pump water and treat sewerage; it costs money to maintain the system and to deliver the product to retail customers in the city and wholesale customers in the suburbs.

Detroit collapsed into the largest municipal bankruptcy in American history in large part because its elected officials refused to do what they agreed to do. If their successors repeat the mistake, the result is likely to be less forgiving.

daniel.howes@detroitnews.com

(313) 222-2106

Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at http://detroitnews.com/staff/27151.

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