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Bessent: Detroit needs help just like municipalities around the nation

Michigan Gov. Rick Snyder announces he will appoint

Michigan Gov. Rick Snyder announces he will appoint an Emergency Financial Manager for the city of Detroit during a town hall meeting at Wayne State University in Detroit, Michigan. Detroit has more than $14 billion in debts and liabilities and has 10-days to appeal Snyder's decision. (Feb. 29, 2013) (Credit: Getty Images)

The city of Detroit has been on the skids for decades, and Friday it finally tumbled into the financial abyss. Michigan Gov. Rick Snyder announced he would appoint an emergency manager to take over the city’s troubled finances.

A booming auto industry hub of 1.8 million people in the 1950s, Detroit now has just 700,000 residents. With boarded-up homes, darkened streets, high crime, inadequate policing and failing schools (already being run by another emergency manager), the city is clearly crumbling. There are so many empty lots there’s serious talk of giving them over to urban farming. Things are bleak, but Detroit isn’t alone.

There are cities, counties and villages all across the country in deep distress, with little reason to be optimistic they can return to fiscal health anytime soon. Emergency financial managers are running five other Michigan municipalities. At least seven localities across the country have filed for bankruptcy since 2010.


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In New York, Nassau County has had a financial control board overseeing its finances since 2000. Rockland County and the cities of Syracuse, Long Beach and Buffalo are teetering on the brink, and hundreds more ended one of the last two fiscal years with a deficit.

One thing most have in common is a crushing burden of employee medical and pension costs they can’t afford, and recession-weary residents who don’t want to pay higher taxes. Declining populations, deindustrialization and shrinking tax bases have added to the woes in many places.

Emergency financial managers in Michigan have the power to slash spending, change labor contracts, merge or eliminate municipal departments, sell off assets and, if all else fails, push for bankruptcy. There’s no good alternative to those measures, but they’re bitter pills that may only delay decline.

In Detroit things are complicated by partisanship and race. Detroit is overwhelmingly black and dominated by Democrats, in a state that is mostly white with a state house and legislature controlled by Republicans. So there is a deep anti-manager sentiment in Detroit that could prompt Mayor Dave Bing or the city council to sue to block the appointment.

Whatever happens in the short term in Detroit, the states and the nation are going to have to figure out how to resuscitate municipalities fallen on hard times. because there are just so many of them.

Tags: detroit , fiscal emergency , budget , money , debt , health care costs , pensions

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