Detroit has tapped Jay Rising, whose long fiscal career spans stints in top state and private sector posts, to fill the chief financial officer position being vacated by Dave Massaron.
Rising, a former state treasurer and chief executive officer of Detroit Medical Center, will assume the role of acting chief financial officer on Jan. 18, Mayor Mike Duggan said in announcing the appointment Tuesday. Duggan will eventually seek council approval to make the appointment permanent.
Massaron departed to become budget director for Michigan Gov. Gretchen Whitmer.
Duggan said an early priority for Rising will be to work at the federal and state level to gain financial support for the city’s COVID-19 response and economic revitalization efforts.
“Jay is the most knowledgeable person in Michigan on federal and state funding and will be enormously valuable in our efforts to secure funding from the Biden and Whitmer administrations for programs that directly affect the residents of Detroit,” Duggan said.
Rising, who is well respected by Democratic and Republican state lawmakers, joins the city as it plans to come to market next month with its first voter-approved blight bonds and as work continues on the next budget while managing the COVID-19 pandemic’s damage to revenues and post-Chapter 9 development efforts. The city emerged from bankruptcy in late 2014 after shedding $7 billion of debt.
“I am excited to build on the work that already has been done and to leverage my experience to bring more state and federal resources to bear in Detroit,” Rising said in the statement.
Rising was a deputy state treasurer from 1983 to 1991. He later moved to the private sector joining the Michigan-based law firm Miller Canfield where he was a senior partner between 1991 and 2003. He returned to the treasurer’s office in 2003 when then Gov. Jennifer Granholm named him to the top post. He remained there until 2006.
He joined the Detroit Medical Center as CFO in 2006 and held that post until 2013, helping rebuild its fiscal condition, and then held other executive leadership positions until 2015. Duggan was chief executive officer at the DMC from 2004 to 2012 before running for mayor.
More recently, Rising was chief operating officer for Wayne County helping the county orchestrate a financial recovery plan and was tapped by Whitmer in 2018 to serve as cabinet secretary. Rising helped craft the Democrat’s proposed bond-financed road plan that was blocked by GOP lawmakers.
Detroit has managed through a COVID-19 pandemic revenue hit of $400 million with cuts, reserves, and other measures that protected it from a return to state oversight. It won voter approval for up to $250 million of bond borrowing for blight removal in November.
Detroit is planning to bring to market in February $175 million of the authorization. The bonds will mark the city’s third stand-alone deal since bankruptcy. The city is rated three notches below investment grade.
The city, home to 670,000 residents, has won a series of upgrades since emerging from Chapter 9 but its ratings remain firmly in speculative grade. Ahead of a fall deal, Moody’s Investors Service affirmed the city’s Ba3 rating and positive outlook while S&P Global Ratings affirmed the city’s BB-minus rating and negative outlook. "The negative outlook on the BB-minus rating reflects the unprecedented fiscal and economic pressure stemming from the COVID-19 pandemic and ensuing recession," said S&P analyst John Sauter.
Post-pandemic, pensions remain the city’s most pressing fiscal strain. The city's 2014 plan of adjustment gave the city breathing room with help from the state and private entities until 2024 when an estimated $170 million payment is owed. The city has built up $185 million in a Retiree Protection Fund to offset the impact on the operating budget and it’s expected to reach $355 million by 2024.
The city closed the books June 30 on its fiscal 2020 budget of $1.25 billion with a $746 million fund balance, up $54 million from 2019, including an unassigned balance of $109 million – down $14.2 million from 2019. The city will use $20 million of the unassigned balance to offset pandemic-related revenue losses and $30 million going to the special retiree fund.
The city’s total net position, which accounts for all assets and liabilities of its business and governmental activities, was $844 million in fiscal 2020, down from $970 million in 2019, according to the comprehensive annual financial results published in December. Its unrestricted net position showed a deficit of $1.03 billion.
The city had revenue of $2.16 billion and expenses of $2.18 billion. The city’s bonded debt totaled $2.1 billion, an increase of $55.1 million from 2019 with total primary government long-term obligations of $4.9 billion, an increase of $222 million.
