- Associated Press - Sunday, December 4, 2011

DETROIT — The idea is extreme, even in a city accustomed to fighting for survival: Should the state of Michigan step in to run Detroit?

The governor has taken steps in that direction, proposing an unprecedented move that could give an appointed manager virtually unchecked power to gut union contracts, cut health insurance and slash services. But city leaders bristle at the notion.

“This is our city,” Mayor Dave Bing said. “Detroit needs to be run by Detroiters.”

If it happens, Detroit would be the largest American city ever taken over by a state. Michigan has seized control of smaller struggling cities, but until now Detroit was always off-limits.

That changed last week, when Gov. Rick Snyder’s administration said it would begin a review of Detroit’s precarious finances. If the Republican governor concludes that the city’s economic situation constitutes an emergency, he could dispatch a manager who could push the mayor and city council to the sidelines.

It’s not clear how everyday services such as trash pickup and bus service would be affected, but the fixer’s mission would be clear: Do whatever it takes to stop the bleeding.

Mr. Bing, a Democrat, says Detroit doesn’t need the help. He insists the city is reducing a $150 million budget deficit and easing cash-flow problems on its own.

“We know what needs to be done, and we stand ready to do it,” an indignant Mr. Bing said.

The financial review starts Tuesday and may last up to 90 days, meaning a takeover could be under way by the end of February.

The same fate has befallen other cities.

Atlantic City agreed in 2010 to let New Jersey take over its finances in an arrangement that allowed the city to spread a $9.5 million deficit over five years, sparing homeowners and businesses a significant property tax increase.

In Pennsylvania, Gov. Tom Corbett, Republican, signed a law in October enabling a takeover of Harrisburg.

Managers already oversee the Michigan cities of Flint, Pontiac and Benton Harbor, as well as the Detroit public schools.

“It terms of a city, I think Detroit stands alone,” said Michael LaFaive, director of fiscal policy at Michigan’s Mackinac Center for Public Policy, a nonpartisan group that espouses free markets.

An emergency financial manager would have the power to privatize utility departments, as well as the bus system and other agencies. A manager also could sell off city-owned parking lots and even Belle Isle, Detroit’s popular island park, Mr. LaFaive said.

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