‘Detroit’s not going into bankruptcy’ (so much for that)

Updated
 

Update: A county judge has blocked Detroit’s emergency manager and the Michigan governor from filing bankruptcy proceedings for Detroit. They had rushed the paperwork through five minutes ahead of a hearing on challenges by retirees who stand to lose benefits in a bankruptcy. “I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” the judge said.

On June 14, 2011, Michigan Governor Rick Snyder talked to reporters after returning from financial meetings in New York. From the Detroit Free Press account:

“Detroit’s not going into bankruptcy,” Snyder told reporters, as he beamed with encouragement from his meetings Monday with three top bond rating agencies in New York. He said he hopes Michigan’s rating returns to the highest levels possible.

“We’re going to work hard to make sure we don’t need an emergency manager, and bankruptcy shouldn’t be on the table,” Snyder said of Detroit.

Snyder went on to appoint an emergency manager for Detroit, in March, and now that emergency manager has filed for bankruptcy for Detroit, with Snyder’s blessing. The emergency manager and Rick Snyder control what happens in Detroit now. The city is not really a democracy, not at the moment.

With that in mind, I’ll paste Snyder’s explanation yesterday in full after the jump. H/t Eclectablog.

 

From the video posted by Gov. Snyder yesterday:

 

Today I authorized the emergency manager for the city of Detroit to seek federal bankruptcy protection.

This is a difficult, painful decision, but I believe there are no other viable options.

Why did I do this? What’s the rationale and what’s the impact for both the city of Detroit and the state of Michigan? 

Well let me start with the fact that this is a situation that has been 60 years in the making, in terms of the decline of Detroit. From a financial point of view, let me blunt: Detroit’s broke. It’s been spending 38 cents on the dollar towards legacy costs. That number was projected to grow into 65 cents on the dollar. That’s not a sustainable situation.

But more important than the financial situation, are the poor services that are being delivered to the citizens of Detroit. They simply deserve better. If you look at it in terms of public safety, Detroit has been on the top-ten list of the most violent cities in 24 of the last 27 years. Response times for police calls are at 58 minutes versus the national average of 11 minutes. The clearance rate on cases is 8.7 percent. Then you can go on to fire, EMS, street lights – the list goes on. This is not viable nor appropriate for the citizens of the city.

What will federal bankruptcy do for the city? It’s an opportunity for a fresh start. It’s an opportunity to say, Let’s make realistic promises to creditors by revising those debts. And more importantly, let’s put in place a plan to invest in the city, to get improved services to citizens. That’s critically important and something they deserve. 

What does it mean to the state of Michigan? The state of Michigan is the comeback state, but for Michigan to be a great state again, it can only happen if Detroit is on the path to being a great city. This is a critical step in making that happen. Let’s move forward and get this done together.

What Snyder skips over, in assigning blame for the fall of Detroit to 60 years of history and calling for new investment in the city, is the state’s recent role in withholding revenue from Detroit. Once Republicans got ready to take over the city, they got interested in sending over dollars.

Rick Snyder and Michigan

'Detroit's not going into bankruptcy' (so much for that)

Updated