Michigan Governor Rick Snyder cleared the way for a state takeover of Detroit, declaring that the city faces a fiscal emergency and that he has identified a top candidate to assume its management, Reuters reported on Friday. Snyder's declaration on Friday virtually assures that the state of Michigan will assume control of Detroit's books, and eventually decide whether the city should file the largest municipal bankruptcy in U.S. history. Detroit has faced the steepest population decline of any major American city in recent decades. Once the fifth largest U.S. city, it now ranks 18th in size with about 700,000 people. A report commissioned by Snyder has described what it called "operational dysfunction" in the city government, crushing debt of $14 billion and a current fiscal year budget deficit of $100 million.
For further analysis of Detroit's fiscal distress and more information on chapter 9 bankruptcy, be sure to pick up a copy of ABI's Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition.