Governor declares financial emergency in Detroit
Detroit officials have 10 days to appeal the governor’s emergency declaration. If a manager is appointed, Detroit would become the largest city in the country to be under state financial control.
Los Angeles Times
Detroit’s deteriorating fiscal condition is so dire that Michigan Gov. Rick Snyder on Friday declared a city financial emergency, paving the way for eventual state oversight and control.
Snyder’s call for an emergency manager, who would wield sweeping powers to reshape the city, underscored a long, troubling arc for Detroit. Once the cradle of the U.S. auto industry and the nation’s fourth-largest city, it is now half the size of decades ago, is struggling against a $327 million budget deficit and has a public sector plagued by more than $14 billion in long-term liabilities.
The next step would be the appointment of a board and state emergency manager with broad powers to deal with the city’s sinking finances.
“There is probably no city that is more financially challenged in the entire United States. If you look at the quality of services for citizens, it’s ranked among the worst. So we went from the top to the bottom over the last 50 or 60 years,” Snyder said at a televised town-hall-style meeting. “The way I view it, today is a day to call all hands on deck.”
Snyder indicated he had a candidate in mind but gave no details.
City officials have 10 days to appeal Snyder’s declaration. If a manager is appointed, Detroit would become the largest city in the country to be under state financial control.
The population has spiraled from 1.8 million to about 700,000 people, dropping to a place near the bottom of the nation’s top 20 cities.
As money has become tighter, the city has eliminated services to abandoned, or sparsely populated, areas. Crime has increased.
Snyder, a Republican, insisted the state cannot afford a big bailout for Detroit. The emergency manager would have the authority to make planning decisions, renegotiate labor contracts and sell some city assets.
At a time many municipalities are struggling financially, five cities and three school districts in Michigan alone are already under supervision from a state-appointed emergency financial manager.
But municipal-finance experts noted that Detroit is on a different scale. “Detroit is a huge and prominent American city, so anything that happens with Detroit will set a much bigger precedent,” said Matt Fabian, at Municipal Market Advisors. “There isn’t a lot of precedent with the state taking control of a city this size.”
For more than a year, Detroit leaders had raced to ward off an emergency manager. It was not enough, said state officials, who re-examined the city’s books in recent weeks and said they found a pattern of overly optimistic revenue estimates, poor and conflicting record-keeping and endless borrowing to make up for shortfalls.
“There have been many good people that have had many plans, many attempts to turn this around; they haven’t worked,” Snyder said Friday.
While some Detroit residents here saw state intervention as one more very public indication of a city crumbling, others hailed it as the first sign of real repair. The city’s business leaders lauded the plan, noting that Detroit’s private sector had experienced tangible signs of growth and reinvestment — from newly filled downtown offices to young entrepreneurs opening dress shops — even as the public sector had lagged.
Some officials objected strenuously. “For one individual to be able to wipe out the duties of our duly elected officials, that’s more or less a dictatorship and it’s against everything that America is supposed to be about,” said the Rev. Wendell Anthony, president of the local NAACP.
“If you come into Detroit,” Anthony said, “you own Detroit. You own education. You own police and fire.”
Mayor Dave Bing was more tempered than most in his critique, suggesting that while he opposed an emergency manager, there might be a way for the state and city to work together.
“I will look at the impact of the governor’s decision as well as other options, to determine my next course of action,” he said.
Material from The New York Times is included in this report.