DETROIT — Michigan Gov. Rick Snyder said Friday that unless Detroit’s fortunes suddenly and miraculously improve, he will appoint an emergency manager to take control of the city that was once one of the nation’s most prosperous manufacturing centers.
If the governor follows through with his plan, Detroit would become the largest city in the United States to have its finances placed under state control.
“In many respects, I describe today as both a sad day ... saying there’s a financial emergency in Detroit, but also a day of optimism and promise because it’s time to start moving forward and solving these problems,” Snyder told The Associated Press ahead of a community forum at Wayne State University.
Mayor Dave Bing, who has long opposed the appointment of a manager, said Friday that he would look at the impact of Snyder’s decision and other options to determine what to do next. He has a 10-day appeal period in which to present a better turnaround plan or point out flaws in a report by a review team that spent two months delving into the city’s books.
“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,” Bing said in an emailed statement.
Detroit has a $327 million budget deficit and faces more than $14 billion in long-term debt. It has been making ends meet on a month-to-month basis with the help of bond money held in a state escrow account. The city has also instituted mandatory unpaid days off for many city workers.
Those troubles, along with underfunded city services such as police and fire departments and the absence of legitimate turnaround plans from Bing and the City Council, forced his hand, Snyder said.
“Citizens are not getting the services they deserve and need, public safety, lighting, transportation — all those areas need help, and it’s time to call all hands on deck and say let’s all work together.”
Snyder said he has a top candidate picked out for the emergency manager job, but he would not elaborate except to say the person had “strong financial” and “strong legal knowledge.”
Emergency managers have the power under state law to develop financial plans, renegotiate labor contracts, revise and approve budgets to help control spending, sell off some city assets and suspend the salaries of elected officials.
“The role here is to be that supportive partner and to work on projects where we could really make a difference,” Snyder said, adding there is no “big bailout coming” from the state.
Detroit would be the largest city in the United States to come under state oversight, according to James Hohman, assistant director of Fiscal Policy at the Mackinac Center for Public Policy, a free-market think tank based in Midland, Mich.
In Michigan, Detroit would be the sixth city placed under state oversight. Pontiac, Flint, Ecorse, Allen Park and Benton Harbor already have managers, as do public school districts in Detroit, Highland Park and Muskegon Heights.
A review team first looked into Detroit’s books in December 2011 but stopped short of declaring a financial emergency. A second team began to pore over the city’s finances again this past December and gave Snyder a report last month that said the city’s accumulated deficit as of June 30, 2012, would have topped $900 million if leaders in previous years had not issued bonds.