Deal Might Be The Key To Save Detroit

The city's leaders agreed to a compromise with state officials this week, that may save Detroit from bankruptcy. But Detroit Free Press columnist Rochelle Riley tells host Michel Martin that a lot more work needs to be done to save the struggling city. They're also joined by NPR Senior Business Editor Marilyn Geewax.

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MICHEL MARTIN, HOST:

Marilyn, I would like you to stay with us, but we want to turn to another economic story, another big, important economic story that we've been following. That's Detroit. The mayor of Detroit, Dave Bing, and the governor of Michigan, Rick Snyder, signed an agreement yesterday that's intended to save that city from bankruptcy. It sets up a new system to review the city's finances. Detroit had been in danger of running out of money this month, and has a long-term debt that's estimated to top $12 billion. We wanted to talk more about this important story that we've been following, so we've called, once again, Rochelle Riley. She's a columnist for the Detroit Free Press. Rochelle, welcome back to you.

ROCHELLE RILEY: Thank you very much.

MARTIN: So tell us about this new framework. What does it do? How does it work?

RILEY: Well, the first thing we hope is that it will work. It's an unprecedented deal that will have a committee whose members are appointed by the governor and the mayor and the city council who all have to be accountants with some type of city fiscal experience to go through and restructure Detroit, to fix the finances, to balance the books, and to make sure that they come out on the other side, able to actually pay the bills and pay employees.

MARTIN: Is this state control? I know that this is one of those very sore points with city leaders. They felt that this was a state take over. Is it, or is it not?

RILEY: Its - well, what they've come up with is actually a state cooperative. And what they wanted to avoid, even more than bankruptcy, was having the governor appoint an emergency manager who would come in, and the city council and the mayor have no responsibility. And in some instances where they've used an emergency manager, the city council and mayor had no jobs. So this was a way to make sure that the city council and mayor could stay in their jobs and focus on policy and work with the state to fix the finances, but be clear that this is a financial board more than an advisory committee, and they will have to approve spending and make some determinations about the changes in structure, including reopening union contracts, which is the hugest nut to crack.

MARTIN: Well, what effect do you think all this is going to have on the unemployment, or the employment picture in Detroit? As you heard Marilyn just say that auto sales has actually been a bright spot in the economy the last couple of months. But then I think one of the fears is, in this new arrangement, that people are going to be fired. So is there any sense that - is there any sense of what impact this is going to have on the employment picture in Detroit?

MARILYN GEEWAX, BYLINE: Well, there are two things that have to happen. Excuse me. One is that the city government cannot be the large employer that it has been for decades in Detroit. For people who couldn't get jobs elsewhere, they could get a job with the city. That's not going to be the case.

And if Detroit can fix its finances and get back on a right path, it will be easier for the mayor, who has desperately tried to bring in new business and new residents, it'll be easier for him to do that. And that will eventually increase jobs. So it could be a win-win, but those two things both have to work.

MARTIN: Any sense, Rochelle - I know this is just kind of fresh news here - how the city is receiving this information?

RILEY: Like pretty much everything else in Detroit, it's a nightmare. You've got people who would rather have had bankruptcy. You've got people who are calling for the unions to do a city-wide strike. And, quite frankly, the city is still running out of money until this happens. Even though the state helped free up $137 million in loan funding and bond floating, the bottom line is there's still seven days for the mayor to appoint a chief financial officer, which the city hasn't had, unbelievably.

And then you've got a month for them to hire the different people and staffs that those people will need. so we're a long way from this doing something, which is why some people thought a very quick and clean-cut bankruptcy would be faster and easier for Detroit. So we'll have to see.

MARTIN: It's still a complicated situation. We'll stay on top of it, with your help. Thanks.

RILEY: Absolutely.

MARTIN: Marilyn, last word to you. You know, we've - talking about the whole question of government-versus-private-sector employment, what is the trend there in public sector employment? We hear about how the private sector is adding jobs. What about on the public sector?

GEEWAX: It's true that job growth is really on the private side, because so many governments, just as Detroit, has had - they've had a lot of trouble, and there are cutbacks all over the country. So you've got to turn to the private sector for growth. And fortunately, for Detroit, I've got to say, the really - the bright spot in today's news about unemployment is that manufacturing is coming back. About 37,000 jobs were added in - just in March. We've added more than about a half a million jobs over the last two years in that sector.

So that's good for Detroit. Yes, it's a tough time for the city, but on the other hand, fortunately, the auto industry is pulling forward.

MARTIN: Marilyn Geewax is NPR's senior business editor. She joined us here in our Washington, D.C. studios. Rochelle Riley is a columnist for the Detroit Free Press. We caught up with her at WUOM in Ann Arbor, Michigan.

Ladies, I thank you both so much for speaking with us.

GEEWAX: Oh, you're welcome.

RILEY: Thank you.

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