Review Team to Examine Benton Harbor Finances

LANSING – Governor Jennifer M. Granholm today announced that she has appointed a financial review team to examine the city of Benton Harbor’s finances under the Local Government Fiscal Responsibility Act, Public Act 72 of 1990. The review team must report its findings to the governor within 60 days, unless granted a one-time, 30-day extension.

Under PA 72, a financial review team must reach one of three potential findings: a serious financial problem does not exist; a serious financial problem exists, but a consent agreement containing a plan to resolve the problem has been adopted; or, a local government financial emergency exists, because no satisfactory plan exists to resolve the serious financial problem.

Review team members are:

• Robert J. Kleine, state treasurer;
• Thomas McTavish, Michigan auditor general;
• Frederick Headen, director, Local Government Services Bureau, Michigan Department of Treasury (representing state officials with relevant professional experience);
• Marcia Jones, assistant city attorney, city of Kalamazoo (nominee of Speaker of the House of Representatives);
• Bret Witkowski, Berrien County treasurer (nominee of Senate Majority Leader);
• Darnell Early, city manager, city of Saginaw (representing persons with relevant professional experience);
• Linnie Taylor, councilwoman, city of Southfield (representing persons with relevant professional experience).

The Department of Treasury conducted a preliminary review of the city’s finances in August 2009, pursuant to a request by the Benton Harbor city manager. The preliminary review found that a serious financial problem currently exists in Benton Harbor as a result of several issues, including fund deficits, accumulated deficit spending, improper reliance on inter-fund borrowing, unresolved material internal control deficiencies, failure to distribute property taxes timely, and failure to submit payroll taxes timely.

For more information about the PA 72 process, visit the local government fiscal health page on the Department of Treasury’s Web site at www.michigan.gov/treasury.