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Possible Deal to Save Detroit 'Stymied' by Unions, Ailing City Faces State Takeover

"...fierce 'opposition from unions -- in a city that remains a bastion of labor power -- has so far stymied efforts to pass a rescue package.'"

Photo source: 100AbandonedHouses and Kevin Bauman via Flickr

Detroit officials have until Thursday (what’s with Thursday deadlines?) to rescue their ailing city from financial insolvency or a state takeover.

“A deal backed by Mayor Dave Bing and Michigan Gov. Rick Snyder, a Republican, would grant the city the power to void contracts and slash costs but not provide state funding or loans to bail the city out of its financial problems,” CNN Money reports.

But fierce "opposition from unions -- in a city that remains a bastion of labor power -- has so far stymied efforts to pass a rescue package,” the report adds.

If the city council doesn’t get its act together and come to an agreement on the deal by Thursday, Gov. Snyder has announced that he will (legally) appoint an "emergency manager" to take over the day-to-day operations normally performed by the mayor and city council.

“The city council is under pressure from the public and city unions to reject the deal with the state [emphasis added],” Money reports, “At the same time, it would lose its powers if Snyder goes ahead and names an emergency manager.”

And with all these massive fiscal problems, the only action the council has taken this week was to double the city's corporate income tax to 2 percent.

“Years of decline in population and businesses and a shrinking of the tax base have pushed Detroit into a deep financial hole despite a recent resurgence in the U.S. auto industry,” CNN Money reports.

“Without more cost cutting, the city will won't be able to pay its bills come June. An estimate in January, the most recently available, was that the city would be down to $20.9 million in the bank by the end of this week,” the report adds.

So let’s say the unions have their way, the city council can't come to an agreement on the Bing & Snyder deal, and the governor appoints an “emergency manager.” What powers would he/she have to save Detroit? If it comes to that, an “emergency manager” would have the authority “to void contracts with both unions and vendors” and sell off city assets.

Void contracts with unions? Whoa. If the unions don't like the rescue package, they're going to hate a Republican-appointed "emergency manager."

“As the debates, negotiations and lawsuits raged this week, they did so without Bing, who was recently released from the hospital after serious intestinal surgery and won't return to work for two weeks,” CNN Money reports.

“Both Bing and Snyder say they want to avoid a state takeover, which in itself could be the first step toward the largest municipal bankruptcy in the nation's history.”

And now for something truly depressing, here’s a portion of Kevin Bauman’s collection of 100 abandoned Detroit homes (via Business Insider):

[gallery link="file" order="DESC" columns="2"]

See the rest of Bauman's collection here.

One last thing…
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