Detroit’s dire financial straits have motivated Michigan to brush aside the city’s elected officials and appoint an emergency financial manager for the troubled former manufacturing hub. Governor Rick Snyder charged Kevyn Orr, the bankruptcy expert who represented Chrysler during its restructuring, with rescuing the city’s finances.
Mayor Dave Bing, who has long opposed the appointment of such a manager, struggled to tame the city’s $100 million cash flow deficit, $327 million accumulated deficit and looming $14.9 billion in unfunded pension liabilities. Facing potential bankruptcy, the only other alternative, Bing told reporters he was happy to have “teammates” working to rectify the city’s finances.
Since emergency financial mangers are appointed, as opposed to elected, they are believed to be immune from politics and are permitted to break with the city’s charter. Such freedom allows the manager flexibility to solve otherwise intractable problems, proponents say. Those opposing the move worry that the appointment will give the manager cart blanche to break existing contracts and open the door to excessive privatization of city services.
Orr starts work March 25 in Detroit, now the largest city in the country under state oversight. His term will last 18 months, but he said he hopes to get the job done sooner.
The citizens of Detroit are not taking the decision lightly. Some community groups held a prayer vigil outside federal offices in the city when state oversight was first proposed, saying they planned to ask Attorney General Eric Holder’s office to investigate the constitutionality of Governor Snyder’s expected appointment of the manager.
New York State’s Nassau County, struggling with a $176 million deficit, was put under the control of an emergency management board. In Michigan, managers have been appointed for several cities, including Hamtramck and Ecorse.