On the verge of collapse, the city of Detroit is now run by an emergency financial manager
The governor of Michigan and the mayor of Detroit both agree it’s a last ditch effort, but with the city in decay and tens of billions of dollars in debt, the city is now under the control of an unelected emergency financial manager, whose decisions override any by the elected mayor or city council. Yes, in order for Detroit to survive at all, it’s now being run by a lawyer-czar. But it could be Detroit’s last hope.
The naming of Kevyn Orr as the city’s emergency manger will give him many of the same powers as a bankruptcy judge. He can throw out contracts with public employee unions and vendors that the city can’t afford, and he can make further cutbacks in already depleted city services if he decides they city can’t afford them.
But his appointment does not preclude Detroit being forced into the largest municipal bankruptcy in the nation’s history in the months ahead. His powers do not include the ability to make changes in the city’s severely underfunded pension funds. Orr told a news conference that he hopes to be able avoid a bankruptcy, though he said that step couldn’t be ruled out.
“Everything is on the table,” he said.
He said he hopes to get consent from the various parties to fix the city’s balance sheet and thus avoid a bankruptcy filing. “Don’t make me go to the bankruptcy court. You won’t enjoy it,” he said. “I’m very comfortable in the bankruptcy court. I don’t want to pull that cudgel out unless I have to.”
Many Detroit residents are upset, but many more know that something has to be done. The city should be bankrupt. There isn’t enough money for firefighters, police officers and teachers, resulting in the city being understaffed and still unsure of where it’s going to get the money to pay the city employees it has left. After a peak population of 2 million, there are now only about 700,000 people left in Detroit with more leaving every day. Much of the city’s splendid history lays in ruins, a third of the city is in poverty and the unemployment rate is double the national average.
So the question is… what happens when a major American city can no longer afford to exist? Small towns and cities have disappeared before, but you can’t exactly just kick everyone out and abandon a major metropolis like Detroit. So this may be Detroit’s only option left.
I lived in Michigan from 1997-1999 and back then, the city was already in a deep, deep hole. Driving into Detroit felt like driving into a post-apocalyptic hellscape and building three casinos was at the time, seen as Detroit’s last good chance to recover, but that didn’t work out as planned either.
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