Saving Detroit: New manager targets 'greatest turnaround' in US history
Michigan's governor has tabbed a bankruptcy lawyer to serve as the emergency manager for Detroit's financial crisis. He hopes to avoid bankruptcy, but wouldn't rule it out.
In Pictures Detroit's dilemma
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That could be an understatement.
Michigan Gov. Rick Snyder (R) has stepped in to appoint Kevyn Orr, a restructuring specialist who represented Chrysler during its 2009 bankruptcy, as emergency financial manager for the Motor City.
Mr. Orr comes to a city that is drowning under nearly $15 billion in long-term debt and undergoing major population loss. Moreover, the state's decision to intervene has been fraught with racial undertones, and the Detroit City Council has made it clear that it wants the governor to butt out. Some of the more than 40 unions currently under contract with the city are expected to take legal action if they're asked to take too large a cut.
Orr spoke to the difficulties ahead when he told reporters at his introduction Thursday: “If we can do this, I will have participated in the greatest turnaround in the history of this country and something I can tell my grandkids about. It is very inviting and exciting.”
Earlier this month, Governor Snyder declared the city is suffering a financial emergency. A state review found Detroit has been dealing with annual deficits since 2005, and that it has unsuccessfully sought to fix them through long-term borrowing.
While Mayor Dave Bing says he intends to cooperate with Snyder and Orr, the city council has opposed state intervention since last summer, when members launched a legal challenge to the consent agreement that gave the state a larger role in overseeing the city's finances.
“Whoever is picked, they will make that person’s life is extremely difficult, professionally and personally,” says Ken Sikkema, a senior policy fellow at Public Sector Consultants, a public policy think tank in Lansing, Mich., and a former Republican majority leader in the state Senate.
That resentment has festered over decades. As the population of Detroit has dwindled – due to a suffering auto industry and other economic hardships – the city has become more isolated, both politically and racially, from the rest of the state.
Today, Detroit stands in stark contrast with the rest of Michigan: While Republicans control state politics, Detroit is Michigan’s largest Democratic stronghold. Its leadership and population are overwhelmingly black, also in contrast to the rest of the state.