Gov. Snyder: Detroit needs emergency manager to end fiscal crisis

Michigan Gov. Rick Snyder plans to name an emergency manager to handle Detroit’s fiscal crisis, stripping power from local officials in a withered city that in 1940 was the fourth biggest in the U.S. and a thriving capital of industry.

Snyder said yesterday at a public meeting in Detroit that he plans to take a step he avoided a year ago. The move punctuates decades of decline in the hometown of General Motors Co. His decision may inflame opponents, as the administration of a white Republican seizes control of a place that is predominantly black and Democratic.

“It’s a sad day, a day I wish never happened, but it’s a day of promise,” said Snyder, who is in his first term.

Detroit, with a budget deficit of about $327 million and more than $14 billion in long-term obligations, would be the sixth Michigan city put under state control as Snyder tries to prevent what could be the largest U.S. municipal bankruptcy. Starting later this month, a manager would have the power to cancel labor contracts, cut spending and sell assets.

Jefferson County, Ala., became the largest U.S. municipal bankruptcy in November 2011, involving $3.14 billion of bonds. California’s Stockton, with almost 300,000 residents, and San Bernardino, with about 213,000, sought court protection last year.

No Michigan localities have entered bankruptcy. A review panel’s determination Feb. 19 that a financial emergency grips Detroit cleared the way for Snyder to act to avoid one.

Opponents say state takeovers disenfranchise voters by stripping elected officials of their power over municipalities or school districts, and may protect bondholders at the expense of employees, services and taxpayers.

“We urge the state to be our partner,” the Rev. Wendell Anthony, president of the local branch of the National Association for the Advancement of Colored People, said this week in a statement. “We do not call upon the state to be our overseer.”

Mayor Dave Bing, a Democrat, has said lawsuits, union contracts and a lack of cash has stymied his turnaround plan. Some have said a takeover is racist because, along with Detroit, cities where almost half of Michigan’s black residents live would be under state control. Managers are already in charge in Allen Park, Benton Harbor, Ecorse, Flint and Pontiac.

The 10th most-populous U.S. city in 2000, Detroit has lost a quarter of its residents, falling to about 707,000 last year, according to Census Bureau figures. Those remaining must cope with inadequate police and fire protection, broken street lights and unreliable buses.

City leaders, all Democrats, can resist a takeover by requesting a hearing on Snyder’s decision before a Treasury Department panel. If Snyder wins that round, Detroit can ask a judge to intervene.