FLINT, Mich. (Michigan News Source) – In her state of the state speech this week, Gov. Gretchen Whitmer spoke of how the Flint Water Crisis has hurt the Michigan brand.

An underreported aspect of that tragedy was the role the fiscal malfeasance of the Flint City Council and city administrators played in the crisis, according to a Nov. 7, 2011 report put out by a state-appointed Flint Financial Review Team.

Fiscal malfeasance.

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The vast majority of the reporting and analysis of the Flint Water Crisis begins in 2013, when Flint officials joined the Karegnondi Water Authority and decided to start using water from the Flint River in lieu of staying with the Detroit Water and Sewage Department, which got its water from Lake Huron.

The reporting and analysis state that the decision to go with the Flint River as a water source was to reduce costs.

But what has been often overlooked was what led to the city being put under a financial emergency manager. Two of Flint’s emergency managers – Gerald Ambrose and Darnell Earley, faced felony charges for their roles. Flint’s first emergency manager was put in place in November 2011.

Financial misconduct has a long history.

But the financial misconduct that played a role in this crisis started years earlier, according the 2011 report.

That 10-page report revealed how city officials had raided the city’s Water fund for years to pay off general city operations until there was no money left in it.

“Simply put, these other funds could lack sufficient cash to permit the performance of the statutory tasks assigned to them, to provide preventative maintenance, or to plan for future replacement of equipment,” the 2011 report stated.

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The report lays out how city officials for years were borrowing money from the water, sewage, local street fund, some of which were not allowed to be used on general city expenses.

“Combined, City officials had been utilizing $5.3 million of water supply and the sewage disposal money for general fund operations annually. This amount of annual appropriation was not a loan and was not expected to be repaid to these funds,” the report said.

Eventually, the city ran out of money to borrow.

The report stated, “For example, the general fund had negative cash of more than $9.5 million, the rubbish collection fund had negative cash of almost $1.5 million, and the drinking water revolving loan fund had negative cash of more than $3 million.”

In addition, the report stated that the city’s money for water and sewer needs had gone from $36.2 million in 2006 to $0 in 2010.

It spelled out how the city was budgeting more money than they should have expected to receive. For instance, the city received $66.8 million in 2007-08 in revenues and $63.9 million in 2008-09. Flint was receiving less and less money every year at that point. But in 2009-10, the city still budgeted for $65.8 million in revenues and instead received $57.1 million that year. The report called the budgets “financially unrealistic” and were “effectively meaningless as a financial management tool” and violated the state’s budgeting law.

The city of Flint was given a $20 million bailout by the state in February 2011 via “fiscal stabilization bonds.” As part of the agreement, the city had to cut about 57 full-time jobs. Eight months later, a state review found only “a fraction” of the proposed job cuts it agreed to in receiving the $20 million had occurred.

The Flint Financial Review Team recommended in that 2011 report that the state appoint an emergency manager.