by
In a monumental and controversial moment in Detroit history, Gov. Rick Snyder made it clear Friday an emergency financial manager will take control of city government this month and attempt to rescue Detroit from financial collapse.
Speaking to a hand-picked audience at WTVS-TV in Midtown, Snyder said he is declaring Detroit to be in a financial emergency, a necessary step in the state’s emergency manager law.
“The current system has not been working,” Snyder said. “It’s time to say we should stop going downhill.”
Snyder said he has identified a candidate to be the emergency manager but won't name the person until after the 10-day delay that state law gives for the city to appeal his decision.
The new manager would replace Mayor Dave Bing, who has stumbled repeatedly in his nearly four years in office and is widely viewed as ineffective. The manager will have the authority to restructure Detroit’s finances, union contracts and other aspects of local government.
The naming of an emergency manager is the culmination of decades of tumult in Detroit, brought on by staggering population loss and business flight and an inability of elected leaders to manage the continual crisis. Beyond bankruptcy concerns, the city also has a crumbling infrastructure and notoriously insufficient services.
Snyder recalled Detroit's auto-fueled growth into a huge and prosperous community that changed the world, calling it "the most successful city in the United States" 60 years ago. In the early 1950s, Detroit had two million residents and one of the nation's highest median incomes. Today the population is about 700,000, and the city is one of the poorest in America.
Today, Snyder said, "there is probably no city that is more financialy challenged. If you look at the quality of services to citizens, it's ranked among the worst."
Said Snyder: "There have been many good people that have made many plans, many attempts to turn this around; they haven't worked. The way I view it, today is a day to call all hands on deck."
In a statement, Bing said he will review Snyder's decision before deciding on his next step. He added: "If, in fact, the appointment of an Emergency Financial Manager both stabilizes the City fiscally and supports our restructuring initiatives which improve the quality of life for our citizens, then I think there is a way for us to work together."
A state takeover engineered by a mostly white, Republican administration is an emotional topic in a overwhelmingly Democratic city that is the nation’s largest with a black majority. Opposition from Detroit politicians and others – many of whom could be marginalized by an emergency manager – has been building in recent days.
In Michigan, emergency managers run the cities of Benton Harbor, Allen Park, Ecorse, Flint and Pontiac, plus school districts in Detroit, Highland Park and Muskegon Heights.
The politics of the state takeover are made even more complex by the ongoing city election campaign. The role to be played by the November winners remains uncertain, but it is clear it will not be business as usual.
One mayoral candidate, Krystal Crittendon, the former top city attorney, who challenged the state's role with the city last year, issued a statement that called on Snyder to review what she called the flaws in the state's analysis of city finances.
Another candidate, Mike Duggan, said in a statement: "It’s okay to be angry at the governor, mayor or council over the fact Detroit is getting an EM and, at the same time, still be supportive of the person who has to fill this very difficult EM job."
On the eve of Snyder’s announcement, the city council members discussed legal options, including the hiring of an outside law firm to fight the appointment.
Earlier this week, the Rev. Wendell Anthony, president of the Detroit NAACP, said if Snyder sends an emergency manager to Detroit, then the governor would “own” the city and become responsible for everything that happens in it. He added that a state takeover would be anti-democratic, asking, “Has Michigan become the new Mississippi?"
Snyder’s announcement came after a review by a six-member team headed by state Treasurer Andy Dillon described a city nearing financial ruin, incapable of fixing itself and hindered by a charter that makes it “extremely difficult to restructure city operations in any meaningful and timely manner.”
The report found:
*Pension liabilities and other post-employment benefits that exceeded $14 billion, including about $1.9 billion in funding needed over the next five years that the city has no plan to provide.
*Annual budget deficits since 2005 that have been papered over by issuing debt in the form of bonds.
*Inability of 36th District Court to collect more than 92 percent of fines, fees and other costs.
*Confusion among city officials on how the Detroit Police Department deploys its employees.
The Bing administration, city council and the Snyder administration agreed to a consent agreement to fix Detroit’s finances almost a year ago. The consent agreement proved ineffectual.
Bing has ordered a series of spending cuts in recent months, including furloughs, layoffs and reductions in bus service and fire rigs, among other areas. He has trimmed the city workforce by nearly 1,000 in nine months.
But the review team said that approach had failed to achieve the necessary reforms. And in recent days, media reports underscored the depth of Detroit’s breakdown.
The Detroit News reported last week that 47 percent of the city's taxable parcels are delinquent on their 2011 bills. And the Free Press reported Tuesday about a study that said there’s a possibility that Detroit’s long-term debt could leave just pennies per dollar to spend on all city services.
The Dillon report said that Bing and the council “deserve credit for considering and, in some instances, adopting difficult financial reforms,” but that these measures were “too heavily weighted toward onetime savings and apply only to nonunion employees who represent only a small portion of the city’s overall wage and benefit burden."
