The City of Pontiac, Michigan is on the verge of being taken over by the State (assuming the State re-opens for business).

The following is from Saturday the 29th edition of the Detroit News.

Treasury wants Pontiac review
Move puts troubled city one step closer to state takeover

The city, plagued by a $6.2 million budget deficit and a mayor and City Council that can’t agree on how to resolve it, is inching closer to a state takeover.

Following a preliminary review of the city’s finances in August that found that Pontiac is in the midst of a financial emergency, the state Treasury Department has recommended that Gov. Jennifer Granholm appoint a review team to conduct a more thorough analysis of the city’s finances, the next step in a possible takeover. No action has been taken yet on those recommendations.

If Granholm does appoint a review team, the panel would spend at least 60 days studying the city’s books, and could either work with the city on a consent agreement to get back in the black or recommend that an emergency financial manager be put in place. That manager would run the city and supersede the mayor and council.

“It is rare,” said Terry Stanton, the Treasury Department’s spokesman, referring to how often a review team has been appointed. “There have only been a handful. This is the second review since I’ve been here and that’s been six years.”

Only three other Michigan cities in the last two decades have faced a state takeover because of financial problems so dire the state determined they couldn’t handle them on their own. Hamtramck and Flint are no longer under state control anymore. Highland Park still is under state control.

The Treasury Department’s recommendations follow a preliminary review that was actually requested by Mayor Clarence Phillips. At odds with the council over his proposed 2007-08 budget — which was rejected — Phillips said he felt the city needed an “intervention.” The council argues his budget was based on unrealistic revenue projections that would’ve just exacerbated the city’s problems.

Phillips laid off dozens of police officers and general employees last year. Phillips did not return phone calls seeking comment.

If only Pontiac had a City Income Tax. Then they would surely have all the money they needed to solve their problems.

That, of course, is a facetious statement. Pontiac already has a 1% income tax on residents and businesses and a 0.5% income tax on non-residents who work in the city.

At the end of the day, it still comes down to being able to wisely spend the money you have.