A state appointee has run the cash-strapped city for more than two years. Former Governor Jennifer Granholm appointed Joe Harris the city’s emergency financial manager in March 2010.
Now elected leaders have set a goal for him to leave by December 2013. They hope to get a $7 million emergency loan from the state to help get Benton Harbor out of its “financial emergency”.
Mayor James Hightower says the loan would be “a game changer”.
“It’s going to eliminate the deficit for one and that kind of puts the city in the position to move back towards local control,” Hightower said. He admits it’s only a first step, but “it’s an opportunity to as I say, plug a hole in the ship.
City Commission voted 5 to 4 this week to support Harris’ loan application to the state.
Commissioner Dennis Knowles voted against the loan. He says it's a bad idea to borrow money to pay down the deficit, especially since the city’s 2012-2013 budget numbers aren’t public yet.
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Commissioner Trenton Bowens, who also voted against the loan, called it “naive” to support the loan before the terms and conditions are in writing.
Under the new law authorizing such loans, the state determines how much they’ll offer municipalities or school districts, what the interest rate will be and how quickly it needs to be paid back.
“It looks great on paper, but did anyone read this law?” Bowens asked the commission. Mixed responses came after several seconds of silence.
Knowles suggested Harris can’t ask for the loan yet, because under the city’s charter, he would need 6 commissioners support to borrow money and hold a public hearing.
A Michigan Treasury Department spokesman says emergency financial managers (under PA 72) have the authority to borrow money, and have done so in the past.
Commissioner Duane Seats voted in favor of the loan. He says the city doesn’t have many options.
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The city still has roughly a $2 million deficit and it still isn’t able to make contributions to its employee pension system.
Harris confirmed he is planning on applying for the loan. He declined an interview, saying it was “premature” until the deficit elimination plan is finalized.
However he told the Herald-Palladium;
With the loan the city could pay off its deficits in a year and be left with a rainy day fund, Harris said. Without the loan it would be five years of tightened belts.
Ultimately, it's Michigan's governor who decides when the financial emergency is over.
