In Detroit, Drastic Steps To Avoid Bankruptcy

Detroit is in danger of going broke. The city's elected leaders insist they can handle the crisis but haven't agreed on a plan of action. In the meantime, the governor is taking steps that could lead to an emergency manager taking over the city. To top it off, a petition drive to overturn Michigan's emergency manager law threatens to undo any actions the state would take. It's a wild, financially troubled situation. Michigan Radio's Sarah Cwiek reports.

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Lack of money is also a big problem in Detroit. Three weeks ago, the city's mayor, Dave Bing, made a stark announcement. Without major action, the city will go broke sometime early next year. That leaves state officials saying they may have no choice but to send in an emergency manager, a person with extraordinary powers over the city's finances.

Michigan Radio's Sarah Cwiek reports.

SARAH CWIEK, BYLINE: There are a lot of complicated factors in the swirling drama that is Detroit's financial meltdown. Massive population loss and economic disaster have decimated Detroit's tax base. But for the most part, its infrastructure and legacy costs still reflect the much bigger city it once was.

That means somebody has some tough, unpopular decisions to make. And even though he insists he doesn't want to, Michigan's Republican Governor Rick Snyder has initiated the process that could lead to an emergency manager.

But Detroit's elected officials insist they can handle the problems themselves. As state leaders ramped up their rhetoric, Detroit's politicians emerged with a sudden sense of unity.

MAYOR DAVE BING: This is our city.

UNIDENTIFIED WOMAN #1: That's right.



BING: And we are Detroit.

UNIDENTIFIED WOMAN #1: That's right.

BING: Detroit needs to be run by Detroiters.


CWIEK: That's Mayor Dave Bing at a press conference last week, flanked by city council members and union officials, groups that are now meeting to try to reach a hasty budget agreement. It's a race against the clock bid because state law grants emergency managers extraordinary - some would say draconian - powers to tackle municipal finances.

Governor Snyder and the state's Republican-dominated legislature beefed up that law earlier this year, giving managers the right to throw out collectively bargained union agreements and essentially fire local elected officials. That's already happening in a handful of Michigan cities. But there's also an effort underway to repeal the law by voter referendum.

BING: If you will get 100 signatures personally...


BING: Raise your hand or stand up. Stand up if you will get 100 signatures personally.

CWIEK: At a rally just last week, organizers said they're very close to getting the roughly 162,000 petition signatures they need to get the measure on the ballot. If certified, the emergency manager law would then be suspended until a vote next November. But in response, state officials are now trying to cobble together a new law, one that presumably referendum-proof. All of this infuriates many Detroit residents, who see emergency manager rule as tantamount to taxation without representation.

Maureen Stapleton is a state representative from Detroit, who says Michigan has pushed cities like Detroit to the financial brink.


STATE REP. MAUREEN STAPLETON: We have policies that are disproportionately unfair to communities of color, whether we like it or not. Whether they want to admit it or not. When I said that on the floor of the State House, they booed, ooh.

UNIDENTIFIED WOMAN #2: They know it's the truth.

STAPLETON: Because they know it's the truth.

CWIEK: But amidst all the drama and disagreement, there is one virtually undisputed fact: Detroit stands on the brink of going broke. Bettie Buss is with the Citizens Research Council of Michigan, and she says the city's finances are so out of whack that whoever ends up having to deal with them will likely have to deal with a judge as well.

BETTIE BUSS: We're sure that pretty much everything is going to be challenged in court, but we're not real sure what the eventual outcome is going to be.

CWIEK: And everyone is hoping that enough can be done to stave off what a few experts have suggested might be the inescapable outcome - a bankruptcy filing.

For NPR News, I'm Sarah Cwiek in Detroit.

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