Dire finances leave Detroit stalled

Mayor Bing resists proposed emergency takeover by the state

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Despite assurances from Clint Eastwood and Eminem, Detroit’s rebirth may be on hold, as the city is on a Greece-like track to run out of money before summer, and things are getting increasingly testy between the state’s Republican governor and the city’s Democratic mayor.

Although the automotive sector and some other parts of the city’s business picture have bounced back in recent years, Detroit city government finances are still on an unsustainable course, and the city does not have a viable fiscal plan to avoid running out of money in May.

Last week, the city rejected a proposed consent agreement that would have given a nine-member state-appointed oversight board a voice in city government and started a war of words with the state government, which has its own deadline set for next week.

Mayor Dave Bing said it would be “nuts” to think he would accept the oversight board. “When I did read it, I was appalled.” Mr. Bing and the City Council were expected to meet this week to come up with their own plan, though such efforts have failed in the past.

The political conundrum — the city won’t cede power, but seemingly can’t solve its problems — means analysts and activists here are increasingly resigned to the possibility that Michigan will step in and humiliate its biggest city by appointing an emergency manager to take over its finances, essentially turning Detroit into an American version of Greece.

A vacant warehouse in Detroit is emblematic of the Motor City's financial woes. (Associated Press)

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A vacant warehouse in Detroit is emblematic of the Motor City’s financial ... more >

“Something has to happen. I think what everybody agrees is that the status quo is not sustainable. The city is out of money,” said Michigan State University economist Charles Ballard. “I’m sympathetic to the consent agreement in the sense that right now it seems that it’s the only thing on the table. Local governments don’t like to be told what to do, so it’s understandable that there is reluctance in parts of the city.

“It reminds me a lot of the debt crisis in Europe,” Mr. Ballard said. “The Greeks are resentful for this feeling they are being told what to do by the Germans, but the status quo was not tenable.”

Michigan Gov. Rick Snyder has repeatedly warned that time is running out and that while it’s not his preferred option, the state would appoint an emergency manager and strip power from the mayor and City Council if necessary. On March 26, an emergency review team he put into place months ago must come back with recommendations on the need for a financial takeover.

That law letting the state do that has been used successfully in such other Michigan cities as Ecorse and Benton Harbor. Detroit’s public school district has been under an emergency financial manager for several years in a reorganization widely considered to have been painful but successful.

Doing nothing to protect city services and keep the city out of bankruptcy is not an option, Mr. Snyder said.

“It’s not about [Mayor Bing] and I. It’s about showing results for citizens,” the governor said Friday in a WDHB radio interview with host Mildred Gaddis. “I have no interest in terms of interfering in Detroit at all. It’s not Michigan versus Detroit. We are in this together.”

The governor has planned town-hall meetings to get citizen input and to help educate residents about the city’s financial problems in advance of any decision.

The notion of the state running its largest city and the image it sends to the nation and world, however, has angered many Detroiters, including some civic and religious leaders, who decry big-foot tactics from Lansing — even as money needed to fund police, fire and emergency services and even pension payments — continues to evaporate.

Detroit Free Press columnist Rochelle Riley told city readers Friday that time has run out and that the mayor has been too slow to offer solutions.

Bing failed to fix the mess because he was operating at 33⅓ rpm while the crisis was running at 78,” she wrote. “(That’s a reference to the vinyl records on my grandmother’s stereo years ago. The 33s ran slow. The 78s ran fast. And the 45s were Motown).

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