Cash-Strapped Detroit Avoids Takeover by State Government

Posted April 5th, 2012 at 1:05 am (UTC-5)
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Leaders in cash-strapped Detroit, Michigan have approved a plan that would give the state a bigger role in the city, the historical home of the U.S. auto industry. The state's governor had threatened to appoint an emergency manger to take control of the city

The City Council voted 5-4 Wednesday to approve an agreement between Mayor Dave Bing and Governor Rick Snyder. The agreement requires the city to hire a chief financial officer and a project manager to share in the decision making over the city's finances, and submit its budget to a nine-member advisory board.

For its part, the state will not appoint an emergency manager to replace Detroit's elected leaders and deal with the city's massive $200 million deficit.

The agreement is strongly opposed by unions representing city employees, who have filed a challenge in federal court.

Detroit has seen it tax base decline in recent decades because of the declining presence of the so-called “Big Three” automakers, leading to the exodus of businesses and residents and subsequently depleting the city's tax base.