THREE OAKS, Mich. – The city of Benton Harbor is millions of dollars in debt and could be facing bankruptcy.
2 1/2 years ago, the state appointed an emergency financial manager to help turn around the city.
Benton Harbor continues to struggle financially, and the manager and commissioners remain at odds.
In 2008, the state also issued an EFM to the village of Three Oaks, which was near bankruptcy.
However, that community emerged from state takeover successfully after drastic cuts and working together.
The quaint town of Three Oaks is about 25 miles from Benton Harbor.
Less than 2,000 people live there, compared to around 10,000 in Benton Harbor.
While the areas may be different in that respect, they share a similarity in that both hit financial rock bottom.
But Three Oaks was able to recover, officials say through drastic cuts and cooperation.
When you ask people what the village of Three Oaks is known for, many will say "Prancer,"...the popular Christmas movie filmed there in 1989.
But its accomplishments also include going from near bankruptcy in 2008, $650,000 in the hole, to financial prosperity a year later.
A state-appointed emergency financial manager stepped in.
"We all knew there was a problem, so we all worked with her," said Council President David Grosse.
Grosse says they went through every expenditure with a fine tooth comb. "We looked at every nickel and dime we spent."
They cut pay, froze wages, raised water rates and...."at one point we laid off the entire police department, except for the chief," explained Grosse.
But after working with the EFM, Three Oaks was able to hire officers back part-time.
"She didn't do anything we couldn't. She did it faster and was able to cut through the red tape."
WSBT News Reporter Denise Bohn asked Grosse, "What advice would you have for other communities, like Benton Harbor, dealing with an EFM?
"You have to cooperate with the EFM," said Grosse. "When we got elected, we told the people we're going to make every one of you mad. I think we did at some point."
But Grosse says working together through the dramatic cuts and the difficult times was worth it.
"You can see people walk downtown, and people have the pride back again. People are so happy things have turned around," said Grosse.
Three Oaks now has a balanced budget. They can pay their bills and had money left over which was used to replace 90% of their water system and repaving most of the town's streets. They say they're proud to be an example of how the Emergency Financial Manager system can work.
Benton Harbor is one of five communities in Michigan currently under state control.
The communities of Flint, Pontiac, Alan Park and E-Corse are all under state control.
However E-Corse, a city near Detroit, has improved and will regain local control in two months.
WSBT also learned that no community in Michigan has ever filed for bankruptcy something that is possible in Benton Harbor.
Benton Harbor's EFM is holding hearings in the next few weeks regarding possible levying a special property assessment to help pay to keep the city's police department running.
Benton Harbor currently owes more than $1.2 million to city vendors, as well as $180,000 to a property owner for excess taxes collected, along with a $25,000 dollar lawsuit the city lost, $60,000 owed to the city's Fire Escrow Fund, and the city owes $300,000 to Benton Township for water fees collected on their behalf but never given to the township.
