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State Government Takes Financial Reins In Detroit

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State Government Takes Financial Reins In Detroit

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State Government Takes Financial Reins In Detroit

State Government Takes Financial Reins In Detroit

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Detroit has reached an agreement with the state of Michigan that the Motor City hopes will help it avoid going bankrupt.

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

AUDIE CORNISH, HOST:

And I'm Audie Cornish.

This afternoon, the governor of Michigan signed a historic agreement with the city of Detroit. It allows the state to assume partial control over Motor City's near ruinous finances.

As WDET's Quinn Klinefelter reports, not everyone is happy with the arrangement.

UNIDENTIFIED WOMAN: Councilmember Jones?

COUNCILMEMBER JONES: Hell, no.

UNIDENTIFIED WOMAN: Councilmember Cockrel

COUNCILMEMBER COCKREL: Yes, with a statement.

UNIDENTIFIED WOMAN: Five yays, four nays.

UNIDENTIFIED MAN: All right, the resolution is approved.

QUINN KLINEFELTER, BYLINE: With that, the Detroit City Council and state officials created a brand new form of government. Council approved a new board and project manager that can override budget decisions made by Detroit's mayor and City Council, designed to preserve some municipal control while giving the state much more oversight concerning fiscal matters. The city is in a financial crisis. Detroit recently borrowed nearly $140 million just to meet payroll and has more than $12 billion in long-term debt.

Though he voted for the consent agreement, Council President Charles Pugh says the city needs more than stricter oversight. It needs an infusion of cash from the state to help enact new reforms.

CHARLES PUGH: You've got to help us help ourselves. You can't just say, do this yourselves knowing we don't have any money and knowing we have this crushing debt load.

KLINEFELTER: Negotiations over the agreement took weeks and often proved to be delicate, as some Detroiters raised the issue of racism - mostly white state officials taking control of a city with a majority black population. But Governor Rick Snyder continually stressed the deal is not a takeover. He argues that Detroit has to restructure its operations to save money.

GOVERNOR RICK SNYDER: So this is not a new problem we've been facing with financial distrust in the city. It's one that's been going on for decades. And I believe now this is the opportunity to say we're going to part of the solution.

KLINEFELTER: The agreement has not pleased city unions, however, who stand to lose members and benefits as Detroit makes new budget cuts. Unions unsuccessfully tried to gain a temporary restraining order against the agreement. Now, union negotiator Ed McNeil says his members may stage an illegal walkout, because many of them feel they have nothing left to lose.

ED MCNEIL: At some point people get fed up. And so they take whatever measures that they need to at that point to let people know that they're at the end of their rope.

KLINEFELTER: Yet Council President Pugh says Detroit has no choice but to trim expenses.

PUGH: We're going to have to do more cutting. I mean that's the reality. We're going to have to think outside the box just to deliver basic services.

KLINEFELTER: Privately, some city officials say Detroit may eventually have no choice but to explore Chapter 9 bankruptcy. But under current law that would require appointing an emergency manager over the city, which the consent agreement just signed by state and city officials is designed to avoid.

For NPR News, I'm Quinn Klinefelter in Detroit.

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