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Michigan Governor Announces Likely State Takeover of Detroit, Will Appoint ‘Emergency Manager’

Mar. 1, 2013 7:38pm Jason Howerton

DETROIT, MI – MARCH 1: Michigan Governor Rick Snyder talks with the news media after announcing that he will appoint an Emergency Financial Manager for the city of Detroit during a town hall meeting at Wayne State University March 1, 2013 in Detroit, Michigan. Detroit has more than $14 billion in debts and liabilities. The City has 10 days to appeal Gov. Snyder’s decision. Credit: Getty Images

DETROIT (TheBlaze/AP) — 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.

The review team also said that because of Detroit’s cash deficit, the city would have had to either increase revenues or decrease expenditures – or both – by about $15 million per month for three months starting in January to “remain financially viable.”

A brochure produced by the state and distributed Friday said that an emergency manager could “more quickly and efficiently reform the finances in the city and stop the cycle of overspending and one-time fixes. Solving the structural problems will create a strong financial foundation that will allow Detroit to survive.”

Snyder’s declaration is the latest in a string of embarrassing setbacks to befall Detroit in recent years.

Explicit text messages made public in 2008 revealed the tawdry affairs and other shenanigans by the city’s then-Mayor Kwame Kilpatrick, leading to criminal charges and eventually prison time for him.

The 2010 census revealed that Detroit – which at one time was the symbol of American progress and held great political power thanks to the auto industry – had lost a quarter-million people over the previous decade.

An undermanned and underpaid police force sometimes appears overwhelmed by the city’s high violent crime rate, and the number of murders is on the rise.

Snyder said he expects an emergency manager to get to work immediately once appointed.

“It took 50 or 60 years to get in this situation, so it doesn’t turnaround overnight,” Snyder told the AP. “I would hope there are more low-hanging-fruit things that can be done fairly quickly to start showing there’s a difference going on.”

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Comments (24)

Grand design
Posted on March 4, 2013 at 1:24am
Sell Detroit to Chicago!

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CourageousGeorge
Posted on March 3, 2013 at 11:49pm
Detroit, once upon a time, was a model city. That was before 50-ish straight years of Democrat control? Outrageous union contracts? Maybe corruption in city council and certain mayors…? (Kwamme’s jury is in deliberation now on 40 something counts. “Corruption in Detroit? Sh!+, the only difference between Detroit and a third world country is the goats running down the street.” said Monica Conyers’ Chief of Staff) The ’67 riots also did the city in. Anyone with means and an ounce of brains left and it’s been spiraling down ever since.

A little math:
Fed gov’t debt about 16.5 trillion. Fed gov’t income about 2.4 trillion. Cut spending to zero and the debt gets paid off in about 6 years.
Detroit debt about 14 billion. Detroit income about 700 million. Take spending to zero and that debt gets paid off in about 20 years.

The amusing thing (if anyone can actually laugh about this situation) is that the majority in the city still think this is a made up crisis masking a “racist” take over.

One wonders in the few cases like this if many of the residents in Detroit are capable of governing themselves? Giving them the benefit of the doubt the answer is, not if they are constantly being lied to.

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FrankieBaby
Posted on March 3, 2013 at 6:36pm
This is what happens when an all black city has to pay taxes. There is no one in the entire city thats expected to pay taxes or work! What the hell did they think was going to happen!?

Yeah I know, Im a racist bigot. SO WHAT! Facts are Facts. You cowards keep up the political correctness. IM NOT.

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Military Vet
Posted on March 3, 2013 at 4:16pm
Decades of union presence and influence combined with corporate greed and mismanagement. It’s a wonder the city lasted this long.

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oldincarolina
Posted on March 3, 2013 at 9:00am
The best thing he could do is to give Detroit to New York or California.

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ghostsouls
Posted on March 3, 2013 at 8:23am
Same thing needs to happen to Chicago and get rid of Rahm Emmanuel.

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Ben__Franklin
Posted on March 2, 2013 at 5:31pm
We need to redraw the map of the US and cut around Detroit to make it a Suburb of Windsor. Then threaten the Canadians with military force if they try to throw it back.

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- FrankieBaby
  Posted on March 3, 2013 at 6:38pm
  They should build a great wall around Chicago and Detroit and air drop food and Nike tennis shoes for them to survive.
  
  Report this comment
Elena2010
Posted on March 2, 2013 at 4:08pm
One name: Mitt Romney. If anyone can fix Detroit, it’s he.

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- ShiningCityGirl
  Posted on March 2, 2013 at 6:18pm
  My thoughts EXACTLY!
  
  Let us not forget that Mitt Romney is originally FROM Michigan! He would be perfect.
  
  Report this comment
campstein
Posted on March 2, 2013 at 3:39pm
Welfare X Welfare = Welfare

Detroit is a a perfect example where Obama has the US headed.
Constantly throwing money into a fire only produces ashes.
People that can’t be productive shall constantly rely on government to bail them out.
Stop the madness and cut off Detroit, sink or swim get YOUR act together.
No more Hand Outs, Hand Ups and Hold Ups.
Take responsibiliy for your ignorant choices in Politicians and wise up.
Murder will continue as long as you blame everyone but yourselves.
Too bad Detroit can’t follow Atlanta’s lead as a progressive community.

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Hammernsickle
Posted on March 2, 2013 at 1:02pm
Detroit IS a “progressive utopia,” this IS what a utopia looks like. Wake up America, do you want the entire nation to look like that?? I’m glad I live in a conservative, rural area, but I don’t know how long it’ll hold out. “The skyscrapers look like gravestones yeah, from out here.”

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lvjohn
Posted on March 2, 2013 at 11:29am
All large cities like Detroit that have been run by minorities are in the same boat, now it is sinking.

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- Pokerjoe
  Posted on March 2, 2013 at 11:53am
  Vote for them because they are black. That will do the trick. Happy days are here again. What fools.
  
  Report this comment
Detroit paperboy
Posted on March 2, 2013 at 10:48am
I would rater live in BAGDAD……….it’s more safe and less corrupt….

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Charybdis
Posted on March 2, 2013 at 10:23am
Liberal state government to the rescue of liberal city government! This should end well.

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- Conservative2
  Posted on March 2, 2013 at 1:30pm
  You’ve got that one wrong, it’s a Republican State Government taking over the failed Democrat City Government, seems the city’s government can’t make those cuts required to keep the city afloat!
  
  Sound Familiar, oh wait, that’s just like Obama!
  
  Report this comment
Independent4233
Posted on March 2, 2013 at 10:20am
Today it’s the economy that has to be taken over.

Tomorrow it wil be the city itself.

National Guard troops will need to patrol the streets to prevent crime and violence as the situation deteriorates. Another black run city going down the tubes economically and socially, just like Camden, Newark, Philadelphia, Gary, Chicago, New Orleans, East St. Louis, Atlanta, et al.

Will this black run federal government suffer the same fate?

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KangarooJack
Posted on March 2, 2013 at 7:14am
…and the rest of Michiganders are sooo sick and tired of Detroit. For Kicks & giggles watch videos of The Detroit City Council in action or for belly laughs view the Detroit Public School Board meetings.

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- G-WHIZ
  Posted on March 2, 2013 at 9:33am
  Detroit is ALREADY 150%-BROKE…WITH MANY OUTSTANDING STATE-LOANS!! wHERE THEY GONNA GIT THE CASH$$ to FIX DETROIT???
  
  Report this comment
Eyeball
Posted on March 2, 2013 at 4:11am
This is the result of unions, liberal democrats, and crony capitalism. I don’t want to hear of any federal bailout for the thieves that brought about the demise of Detroit.

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- TurboCat
  Posted on March 2, 2013 at 6:00am
  Drug sale and use over the decades also contributed to the ruins. Progressives sure do leave huge messes for other people to clean up!
  
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moreoilplease
Posted on March 2, 2013 at 1:49am
I predict more counties, cities, municipalities etc. will be dissolved into state governments and states dissolved into the federal government in the coming years. What state will be first? California? Michigan? I hope I’m wrong.

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Grand design
Posted on March 2, 2013 at 12:18am
Detroit! Another Democrat success story on how to destroy an economy!

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