Whitmer rejects Detroit's Charter revision plan, cites 'legal deficiencies'

Christine Ferretti
The Detroit News

Detroit — Gov. Gretchen Whitmer on Friday cited "substantial and extensive legal deficiencies" in her decision to reject proposed revisions for Detroit's City Charter.

The governor wrote in a letter to Detroit Charter Revision Commission Chairwoman Carol Weaver that the revised charter includes provisions that could cause a financial crisis for the city and that will require close study by the city's Financial Review Commission that was installed as a component of Detroit's bankruptcy, according to a copy of the letter released Friday. 

"If the proposed revisions cause a financial crisis, the FRC could then revoke the city of Detroit's and the Detroit Public School Community District's waiver, requiring the FRC to regain full oversight over the city's and school district's finances," Whitmer wrote. "A financial crisis could have adverse consequences for residents, businesses, and persons who receive a pension from the city."

Reached Friday, Weaver told The News she wasn't immediately able to comment.

The proposal is the result of a three-year undertaking by the nine-member commission impaneled in 2018 by city voters to address quality of life issues including water access, affordable transit, affordable housing, strengthened oversight, increased citizen participation and responsible contracting. 

An analysis by Attorney General Dana Nessel's office notes the charter commission could make changes in the proposal to address Whitmer's objections and then resubmit a modified plan for her approval.

The commission also could opt to submit the proposed charter to city voters for approval notwithstanding Whitmer's objections, Nessel's office said. 

Nicole Small, vice chair of the Detroit Charter Revision Commission, speaks during a press conference with community members in front of Coleman A. Young Municipal Center in Detroit on Wednesday, April 28, 2021.

Detroit Charter Commission Vice-Chair Nicole Small on Friday called Whitmer's decision "deplorable." She noted that extensive resident participation in the process resulted in hundreds of recommendations and meetings to arrive at the proposal.

Small said she and Weaver expect to meet with the commission's legal counsel to determine their next steps. 

Lynsey Mukomel, a spokeswoman for Nessel, said in an email Friday that Nessel's office was asked to conduct a legal review and analysis of the proposed charter revisions and present them to Whitmer for review.  

"Our legal analysis did not contemplate the merit of proposed policy changes and made no recommendations regarding those changes," she wrote. 

Clerk Janice Winfrey said wording for ballot proposals must be finalized by May 11. 

The August primary will be the final election to take place during the Detroit Charter Commission's term. 

The Rev. Horace Sheffield is among a coalition of state lawmakers, union leaders and clergy who oppose the plan.

He noted the proposal would alter the method in which some positions are appointed, including the city's police chief and corporation counsel.

It would prevent the city's mayor, no matter who that might be, he said, from holding those positions accountable. Although the plan seeks to boost oversight and accountability, Sheffield argues the city already has sufficient checks and balances. 

"To diffuse the authority of the mayor and begin to parcel out parts of that to different people on different boards is not the answer. They want to pass this plate to everybody and that's just not a way to run a city. We need a strong mayor, one who can appoint a chief of police and be able to hold people accountable.

"I know there are people who have issues with this mayor, but my basis of not supporting this is the what, not the who," he added, referring to Mayor Mike Duggan.

The AG's review concluded that the proposed charter includes provisions that are inconsistent with requirements of the Home Rule City Act and other applicable state and federal laws. 

Although the recommendations likely don't directly conflict with the terms of the city's bankruptcy, proposed charter amendments regarding pension payments "may be impracticable" because "pension rates are not completely within the city's control," it reads. 

The commission proposed a new section that would not allow for employee benefits to be changed without a two-thirds majority vote of City Council and an affirmative vote of Detroiters in a regular election. But the pension rate for retirees, it reads, is determined in part by funding from multiple sources other than the city and the city cannot ensure collection of the outside funding. 

The review also raises the prospect of a conflict related to the operation and control of the city's water system, which is operated by a regional authority under a 50-year lease as a component of Detroit's bankruptcy. 

It also cites conflicts with responsible contracting sections of the plan, authority over adjustment of utility rates, residency requirements, and a relief program for homeowners who were overassessed. 

"Finally, it is worth noting that many of the proposed revisions to the Charter would be void or ineffective if the City were to file bankruptcy again," the letter states.

In February, the city CFO's office said revisions proposed at that time would spur an "imminent fiscal crisis" that would plunge Detroit $3.4 billion into debt within four years.

The commission ultimately submitted a revised version of the plan to Whitmer and Nessel. 

The city, under the terms of its bankruptcy agreement, must maintain a balanced budget. If it's unable to meet that requirement, Detroit can't sign off on its budget plan, nor can the state. The predicament would force the city back into active state oversight, Detroit's acting Chief Financial Officer Jay Rising told the FRC on Monday. 

"I believe the amount of required spending under the charter exceeds available revenues and as a result, there's no way either one of us could pass a balanced budget," he said.

The Detroit Regional Chamber released a statement Thursday saying that the revisions would put Detroit "on a perilous fiscal path."

"The charter adds cumbersome bureaucracy that will curtail both economic development efforts and efficient service delivery to residents," it contends. 

The Financial Review Commission was installed in 2014 as an oversight measure and given final say on all city budgets, collective bargaining agreements and contracts larger than $750,000. Detroit regained local control of its finances three years ago when it emerged from the strict oversight of the FRC. 

Small has said that the administration's financial projects for what the charter revision would cost are nothing more than "bullying tactics."

The commission, she said Wednesday, assessed the fiscal impact on individual proposals in the plan, but it has not come up with an overall dollar amount. That, she added, would be premature and will be based on the actual revisions that ultimately are adopted and how it's implemented by Detroit's council.

If approved, the charter would go into effect in 2022.