Financial Emergency Over: Elected Government Returns to Pontiac

Ready to operate 'like a professionally managed city'

City of Pontiac. Photo via www.pontiac.mi.us.

In March, after years of emergency management, the city of Pontiac got its finances in order, and management was returned from a state-appointed emergency manager to the elected mayor and city council.

Total spending by the city was cut from $55.2 million in 2008 to $28.2 million in 2015, according to the city’s historical finance information. Over an eight-year period, Pontiac’s annual general government expenditures were reduced from $6.2 million to $3.1 million. Spending dubbed “unclassified expenditures” was slashed from $1.3 million in 2008 down to zero, while “other functions” were cut from $13.2 million down to $2.3 million.

Public safety expenses were cut from $30 million in 2008 to $19.7 million in 2015, while public works spending was cut from $3.3 million to $1.3 million. Health and welfare spending was cut to zero, while recreation and culture spending was cut nearly $600,000.

According to the spending report, the only increase in spending from 2008 to 2015 came in community and economic development, up from $246,000 to $882,600.

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General fund revenues for the city dropped from $54.2 million in 2008 to $33.8 million in 2015. Taxes also decreased over the eight-year period, from $26.6 million to $19.3 million. Grants from the state went from $12.2 million down to $9.4 million, while charges and services also decreased, going from $8.6 million to $602,000. Other revenue increased, however, from $86,000 to $1.3 million.

Pontiac was placed under emergency management by Democratic Gov. Jennifer Granholm in 2009, and in 2013 Gov. Rick Snyder appointed a transition advisory board for the city to begin its departure from emergency management.

Lou Schimmel, who was emergency manager of the city from 2011 until he stepped down in 2013, consolidated 87 different government health insurance plans into one plan to save money.

In addition, the city sold its sewage plant to Oakland County for $55 million, merged its fire department with that of Waterford Township, saving $3.6 million annually. It also contracted for police services with the Oakland County Sheriff, which saved $2.2 million a year.

On March 31, the advisory board amended one emergency manager order and repealed another, allowing the mayor and city council to conduct city business under the Pontiac City Charter. But according to a press release from the governor’s office, the board still has a role. It must approve “on-going litigation, issuing debt, contracts of $500,000 or more, and any changes to collective bargaining contracts, and pension/health care changes.”

State Treasurer Nick Khouri approved the amendments to the emergency manager orders on March 31.

“I am elated that at last Pontiac has surmounted the problems of its past,” Mayor Deidre Waterman said at the advisory board’s meeting. Waterman also applauded the return of power to the city under its charter.

Joseph Sobota, who was appointed city administrator by Schimmel in 2013 after he stepped down as emergency manager, urged the city to continue on its current path.

“We are in this position today because of the reforms initiated and implemented by the past emergency financial managers and emergency managers have begun to realize or have realized significant financial savings,” he said. Sobota also praised past steps to improve the city’s operational efficiency.

“Pontiac truly is a model of how a local government can operate efficiently,” Sobota said. “Operational reforms have been implemented to allow Pontiac to be managed like a professionally managed city.” He also said that barriers to business development, which had become petrified, were repealed.

Jane Bais DiSessa, who became Pontiac’s deputy mayor in September 2015, confirmed that Sobota stepped down from his position with the city after the board’s decision in March. Sobota could not be reached for comment and Bais DiSessa did not respond to follow-up questions about the transition.

“Pontiac shows that not all governments have explored effective cost savings solutions when they come into financial emergencies,” said James Hohman, the assistant director of fiscal policy at the Mackinac Center for Public Policy. “Pontiac was able to live within its means and provide better services to its residents through the reforms made by emergency managers.”

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