Regional News

Michigan Governor Announces State Takeover of Detroit

CHICAGO -- In a historic moment for Detroit, Michigan Gov. Rick Snyder Friday declared the long-struggling city to be in a state of financial emergency and indicated he would appoint an emergency manager within two weeks.

Snyder made the announcement during a town hall meeting at Wayne State University. It came two weeks after a state review team released a report detailing the city’s fiscal problems.

“I look at today as both a sad day, a day I wish had never happened, but also a day of optimism and promise,” Snyder said. He said Detroit used to be “the most successful city in the United States,” but after 50 years of decline, it is now the country’s most financially challenged city.

“We went from the top to the bottom,” Snyder said. “The current system has not been working; we have not stopped the decline. It’s time to not argue or blame but come together as Detroit, Michigan -- not Detroit versus Michigan.”

Snyder outlined the city’s most pressing financial problems, which include chronic cash shortfalls and long-term liabilities that total nearly $15 billion.
Snyder said legacy and debt costs total 30 cents on every $1 in the city’s budget. In answer to a resident’s question on how an EM would tackle the city’s long-term debts, Snyder said he would be asking for all creditors to take a cut.

“All the creditors need to be called to the table,” the governor said. “We’ll be asking something of everyone, to say this doesn’t work, and we need to get a new payment plan in place. That should be part of the strategy.”

Snyder said he already had a “top candidate” in mind for the job of an emergency manager, as well as several back-up candidates, but would not reveal any names. He said the top candidate was an “excellent people person” with a strong financial and legal background. “We need someone who can make decisions.”

Neither Mayor Dave Bing nor any of the City Council members attended the meeting.

Bing and the City Council now have 10 days to appeal the decision. If an appeal is filed, the state will hold a hearing on March 12. After the hearing, the governor will need to make a re-determination on the financial emergency, then ask a state emergency board to appoint an emergency manager.

If an EM is appointed, he or she will run the city for 18 months. After that, a two-thirds vote by the city council and elected officials can end the EM’s tenure, under the state’s new emergency management law, which takes effect in late March. The city then has several options, including asking for a new consent decree or requesting a bankruptcy filing.




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