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GOP Governor Officially Declares Financial Emergency in Detroit


Detroit would be become the largest city in the United States to have state control over its finances.

Barring rapid improvements to Detroit's weakening financial condition or a miraculous nosedive-reversing plan from the city's elected leaders, Michigan Gov. Rick Snyder will appoint an emergency manager to oversee a metropolitan area once renowned for its manufacturing might.

Snyder declared Detroit was in a financial emergency on Friday and appears all but ready to name an emergency manager pending an appeal from Mayor Dave Bing, saying he has a top candidate picked out for the job:

Detroit would be become the largest city in the United States to have state control over its finances.

"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 on Friday ahead of a community forum.

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 and has 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 Snyder's hand, he said.

"Citizens are not getting the services they deserve and need," Snyder said during the forum at Wayne State University. "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."

A March 12 hearing with Bing and the city has been scheduled following the 10-day appeal process. A spokesman for Bing said the mayor would release a statement later Friday.

The mayor said Thursday he has thought since taking office in 2009 that some kind of outside help is needed.

"I'm more interested, instead of fighting Lansing, in working with them," the first-term mayor said.

Snyder described the person he has in mind to become the emergency manager as an "outstanding" with "strong financial" and "strong legal knowledge." Snyder declined Friday to release any other details.

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 city assets not restricted by charter 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.

And in Michigan, Detroit would be the sixth city to come 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 on Feb. 19 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.

Snyder's declaration is the latest in a string of negatives wound tightly around Detroit's neck in recent years.

The 2010 U.S. 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 also is on the rise.

Under state law, an emergency manager's appointment stands for 18 months.

"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."



Follow Becket Adams (@BecketAdams) on Twitter

The Associated Press contributed to this report.

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