Michigan Governor Rick Snyder (R) declared a financial state of emergency for the city of Detroit on Friday, clearing the way for Michigan to take over the city that is $14 billion in debt and faces a current fiscal year budget deficit of $100 million.
Snyder also indicated he had an emergency manager in mind to appoint. If Michigan takes over Detroit's books, the state will have to decide whether the city would better off filing for bankruptcy, which would be the "largest municipal bankruptcy in U.S. history." The city's government has been described as "operation dysfunction" in a report Snyder commissioned.
Detroit would be the sixth city in Michigan to have an emergency manager.
Reuters notes, "Detroit is being watched closely across the country as many cities and towns are still struggling to recover from the housing bust and the deep recession that followed."
Snyder said many people have expressed interest in becoming the emergency manager, who would "eventually have strong powers to develop a financial plan, revise or reject city budgets, consolidate departments, reduce or eliminate the salaries of elected officials, sell eligible assets, lay off workers and renegotiate labor contracts."
Detroit officials will try to convince Snyder at a hearing on March 12 that he should not take over the city and appoint an emergency manager. The officials can also appeal Snyder's final decision regarding the potential takeover.