Emergency Financial Manager to Take Over Detroit

Citing runaway deficits and long-term debts Detroit could never repay on its own, Gov. Rick Snyder announced he will appoint an emergency financial manager for the state's largest city.

By Matt Helms

Citing runaway deficits and long-term debts Detroit could never repay on its own, Gov. Rick Snyder today pulled the trigger and announced he will appoint an emergency financial manager for the state's largest city. Snyder said he has a top candidate in mind, and that person would be in charge for 18 months.

The decision means Motown will soon have a new boss in charge of restructuring Detroit's dire financial mess. That restructuring likely will include drastic cuts in public services and a top-down rethinking of the type of government a shrunken city with a dwindling tax base can afford.

In many ways, those questions have been nipping at Detroit for decades, but the issues came to a head over the last 18 months as increasingly dour economic forecasts found a city unable to address fundamental questions about its debt.

"I look at today as a sad day, a day I wish had never happened in the history of Detroit, but also a day of optimism and promise," Snyder said.

He reiterated that Detroit, once among the most prosperous cities in the nation, "went from the top to the bottom over the last 50 years," losing more than half its population.

"Today is a day to call all hands on deck," Snyder said. "The key answer that all of us want to get to" is a more prosperous city.

Snyder told an invited audience for a broadcast discussion on his decision. The forum was moderated by Stephen Henderson and Nolan Finley, editorial page editors of the Free Press and the Detroit News, at Wayne State University.

Snyder said he will not name who the emergency manager will be right away.

He was flanked on the stage by signs saying "Detroit can't wait" and conveyed a message that Detroit's financial collapse -- under $14 billion in long-term bond debt and retiree pension and health care benefits and a $327-million accumulated deficit, has to fix its finances.

Snyder declared the city in a financial emergency and said it's time to work toward "a bright and shiny future" for Detroit. State Treasurer Andy Dillon, a key Snyder aide on Detroit's financial troubles, said just after the governor's announcement that he believes the state will help out with quick action on fixing Detroit's broken streetlights this summer and, in a restructuring of the Detroit Police department, restoring some of the pay cuts the force has taken in recent years.

Citing the newly created Detroit Public Lighting Authority, Dillon said, " We can start hanging lights this summer. The other thing I think is critical: If we don't restore the morale of the police department and show the public that the police force is functioning well, I think we'll lose a lot of momentum, so those would be the two biggest items for me."

He said he anticipated a slightly smaller police force, largely through retirements, but one with more officers assigned to street patrols.

Public safety has been a critical issue as murders in Detroit spiked last year to the highest level in nearly two decades. Mayoral candidate Krystal Crittendon issued a statement minutes before Snyder's remarks.

"As Detroiters hold vigil, waiting for Governor Snyder to announce his plans regarding the appointment of an Emergency Manager for the City of Detroit, I urge the governor to consider the many flaws and inaccuracies contained in the Financial Review Team's report," said Crittendon, who served as corporation counsel under Bing and former Mayor Ken Cockrel Jr.

"We continue to ask for transparency in the resolution of this fiscal matter. We need to have a full review of everything which is owed to the city as well as everything that the city must pay."

From behind his desk at City Hall, Council President Charles Pugh watched Snyder's announcement in silence with several reporters and TV cameras in attendance. Afterward, Pugh refused to comment.

Council President Pro-Tem Gary Brown issued a statement today in response to Snyder's decision.

"I don't support the appointment of an EFM as it eliminates democratically elected leadership in our city," said Brown, a former deputy police chief. "However, the question is does Mayor Dave Bing and the City Council as-a-body going forward have the will to abandon the privatization ordinance, alter the City Charter to address roadblocks, and support state legislation to change the pension board? In my view, as-a-body City Council is not willing to make these changes. The only alternative is for the governor to appoint an EFM who has the will to implement the necessary reforms."

(c)2013 the Detroit Free Press

Caroline Cournoyer is GOVERNING's senior web editor.