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Michigan governor plans takeover of Detroit

Michigan Governor Rick Snyder talks to a group of people about the city of Detroit being in a financial emergency state during a Town Hall style meeting in Detroit, Michigan March 1, 2013.

REBECCA COOK/REUTERS

Michigan Governor Rick Snyder announced plans for a state takeover of Detroit, a poster child for urban decay, by declaring the Motor City in a state of financial emergency on Friday.

"Detroit can't wait," Snyder said at a televised town hall meeting. "We need to solve real issues here today because citizens are not getting the services they need and we have a financial crisis."

The move by a white, Republican governor to take control of a predominantly black and Democratic city has drawn intense criticism and charges of racism.

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Snyder sidestepped a question about the racial implications, but insisted that the appointment of an emergency manager does not mean the end of democracy.

"This shouldn't be about politics," he said, noting that city council and the mayor can participate in the process.

"Lets all keep working together."

Supporters say it is the only way to tackle Detroit's seemingly intractable problems.

Emergency managers have the power to eliminate entire departments, change labour contracts, sell city assets and rewrite laws without any public review or input.

Currently in control of four smaller Michigan towns and cities and three school districts, the success rate of such managers is the subject of much debate.

Once the fourth largest city in the United States, Detroit has seen its population shrink by more than half from 1.8 million people in 1950 to 713,000 today.

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Racial tensions sparked by the civil rights movement – and the devastating 1967 riots – exacerbated white and middle-class flight to the suburbs. Businesses followed suit, further shrinking the tax base.

With less revenue, the city had to cut back on services, prompting more people to leave.

Then the birthplace of the U.S. auto industry saw its main employers go through round after round of mass layoffs as factories were automated or outsourced and Asian competitors siphoned away market share.

Abandoned skyscrapers, factories and homes litter the landscape. Crime is rampant. Money has gotten so tight that firefighters started buying their own toilet paper – until the Free Press wrote a story about it and truckloads of rolls were donated.

Snyder acknowledged the positive signs seen in Detroit in recent years, like a revitalized riverfront and entertainment district.

But the city has been borrowing money for too long to pay its bills. It is rapidly running out of cash to operate and is expected to end the fiscal year $100-million (U.S.) in the hole.

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More troubling are its long-term liabilities – including the cost of pensions and retirement health benefits – which exceed $14-billion.

The city has 10 days to appeal, but the final decision rests with Snyder. The emergency manager's work would be up for review in 18 months.

The governor's office cautioned that an emergency manager won't necessarily be able to stave off bankruptcy and must find the "best solutions to make Detroit financially stable to build for the future."

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