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Detroit Faces State Takeover After Governor Declares Fiscal Emergency

March 1, 2013 at 12:00 AM EST
Gov. Rick Snyder of Michigan declared a state of fiscal emergency for Detroit, which is facing a deficit of more than $300 million and a possible state takeover. To learn more about this move and why it has been years in the making, Judy Woodruff talks with Christy MacDonald from Detroit Public Television.
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TRANSCRIPT

JUDY WOODRUFF: And it turns out local governments in the U.S. are facing their own budget woes. One in especially big trouble is Detroit.

The city faces a budget deficit of more than $300 million dollars, and has lost a quarter-million residents in the past decade. Today, Michigan’s governor, Rick Snyder, announced plans to appoint an emergency manager to oversee the city’s finances and operations. That would make it the largest U.S. city under state control.

Snyder spoke at a community forum today.

GOV. RICK SNYDER, R-Mich.: It’s time to say we should stop going downhill. It is time to say we need to start moving upward with the city of Detroit.

There have been many good people that have had many plans, many attempts to turn this around. They haven’t worked. The way I view it, today is a day to call all hands on deck, to say there’s been too much fighting, too much blame, not enough resources, not enough people working together, to say, let’s resolve these issues.

JUDY WOODRUFF: Detroit’s mayor, Dave Bing, said in a statement that he remains opposed to the move, but would look at all options.

Christy McDonald has been covering the story for Detroit Public Television, and she was at today’s forum. She joins us now.

Welcome to the NewsHour.

Christy McDonald, my first question is, how did things get to this state in the city — to this condition in the city of Detroit?

CHRISTY MCDONALD, Detroit Public Television: Well, Judy, it didn’t happen overnight. This has been years in the making. And when I say years in the making, it has been decades in the making. So they know that they can’t turn this around overnight, but they know that they finally have to put an end to it and get actually a plan in place that is going to work for the finances and the financial mess that the city of Detroit has found itself in.

JUDY WOODRUFF: Is the governor intervening because he has to by law or because he wants to, feels he should?

CHRISTY MCDONALD: Well, there is an emergency financial manager law that is in place right now in the state of Michigan that compels him to take a look at the finances.

And, again, this isn’t anything new. The city has been under a consent agreement with the state for the past year or so, just under a year. And so what happened is about two months ago, it triggered another financial review. So the financial review team went into the city, took a look at the books over two months, and finally came out last week with their findings for the governor and said, you have got to take a look at this. We think the city is in a financial emergency. Now you have to take a look and see if that is indeed — you agree with that.

JUDY WOODRUFF: And what is it that the state taking over the city, what would the state be able to accomplish that the mayor and local officials can’t do on their own?

CHRISTY MCDONALD: Well, there had to have been a lot of agreement with the mayor and with the city council. And that’s been a bit of a problem for the last couple years.

What the emergency financial manager is going to be able to do in the state is, they have a wide range of powers where they don’t have to have a lot of agreement. They don’t have to have agreement from the city council. They don’t have to have agreement with the mayor. They can come in and start to take a look at some city contracts. They can come in and start to take a look at some city departments that have to be reformed.

And they can come in and take a look at the finances at that long-term debt that you talked about and see how they can start chopping it.

JUDY WOODRUFF: And help us understand, Christy McDonald, why is the mayor opposed? I mean, if this is a way to come in and cut through what I hear you saying is some of the local politics, disagreements, why is the mayor so opposed? 

CHRISTY MCDONALD: Well, an emergency financial manager is pretty much going to take his job, Judy. It moves the mayor to the side a bit. And it moves the city council to the side.

The mayor’s not totally opposed. He says he wants to continue to work with the state. And I think if the mayor and city council had their way, they would like another consent agreement that would maybe have some more stringent milestones that they could meet.

But, essentially, that emergency financial manager, they’re the ones that are going to be in charge, that person, he or she, whoever that is. And they’re the ones that are going to be making those big decisions. And it’s going to marginalize the positions of the administration.

JUDY WOODRUFF: We know the demographics of the city of Detroit, the whole state of Michigan, very different, the state largely white majority population, Republican governor. The city is heavily Democratic, a large African-American population.

What role is politics and race playing in all this, if any?

CHRISTY MCDONALD: Well, there is a racial divide in Detroit and in the Detroit area, Judy. And that’s no secret.

And I can’t tell you that this city, which is largely African-American, is 100 percent joyful that a white Republican governor is going to be coming in and exerting some control over the city finances. But there is a growing majority of people that says, look, bottom line is, we want to make sure that our trash gets picked up. We want to make sure that the abandoned building that’s on our block or right next door to our house gets knocked down. We want to make sure that, when we call police, police come.

And those are the services that they need to restore to the city of Detroit and to the residents. So, at this point in time, people are starting to put a race conversation aside. And, in actuality, there is a viable candidate for mayor — we are in an election year right now — who is white. And he has a very good chance. He’s very popular right now.

And so that has really changed the discussion in this area. But the bottom line is, people really want services. And they say, look, if this can get us the services that we need, that we should be paying for, then that’s what we want to see.

JUDY WOODRUFF: So what happens now? The mayor has, what, is it just a matter of days to take another look at this, to see if he can do something before the state does step in?

CHRISTY MCDONALD: It’s a 10-day appeals process, Judy. And so the mayor then can come forward and say, well, this is maybe why, Gov. Snyder, you should change your decision.

There has been one or two members of the Detroit City Council who has talked about perhaps that they should get some kind of legal representation to legally challenge that. I’m not quite clear sure how far that’s going to go. And I’m not quite sure how much the governor — he will listen to an appeal, but he seems pretty straightforward that he wants to go forward with this emergency financial manager.

Again, he hasn’t named he or she, but seems pretty firm in who he has in mind.

JUDY WOODRUFF: Christy McDonald with Detroit Public Television, thank you.

CHRISTY MCDONALD: Thanks, Judy.