Detroit girds for possible state takeover

With Detroit $12 billion in debt, Michigan is about to start a financial review that could result in a state-appointed emergency manager for the city.

Adriene Hill:Now to Detroit, where the city is in debt. This week Michigan state officials will kick-off a three month "formal review" of the city finances. That could clear the way for a state takeover of city management.

Marketplace's Gregory Warner reports.


Gregory Warner: Detroit leaders say the city could run out of cash by April. But that's not even the biggest problem. State officials looked at the city books and found $12 billion in debt and no plan to reduce it.

Luther Keith: I don't like to say we're at the crossroads, we're literally in the intersection with traffic coming in every direction.

Luther Keith is executive director of Arise Detroit, a community coalition. He says Detroiters have long been opposed to the state appointing an emergency manager, seen as an outsider.

Lou Glazer directs Michigan Future, an economic think tank. He says that a new state law would give that emergency manager unusually broad power to gut union contracts and slash city services. That threat may force public unions to negotiate with the mayor.

Lou Glazer: There now is a real sense of urgency that we've got to fix this. So I think we've gone beyond denial.

Mayor Dave Bing says he can fix the crisis if public unions will accept his deal: nearly $100 million in cuts to wages, health benefits and pensions, and changes to work rules.

I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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