Friday, Sep 30, 2016
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Detroit’s new manager

Detroit-Finances-Emergency-Manager-Orr

Kevyn Orr.

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As expected, the State of Michigan has effectively taken control of its largest city, Detroit. Gov. Rick Snyder has named an emergency manager with sweeping powers to run the city.

Kevyn Orr, an investment banker, is charged with getting the once-great Motor City’s finances under control and restoring basic services. He begins that job March 25. Though many in Michigan are convinced that bankruptcy is inevitable for Detroit, Mr. Orr said that if everybody works together, he hopes that drastic step can be avoided. He added wisely: “Don’t make me go to bankruptcy court. You won’t enjoy it.”

Despite the lurid fantasies of a few Detroiters, there’s no evidence that anybody in government, including Mr. Snyder, enjoyed having to deprive the city of democratic government, even temporarily. But events and irresponsible politicians left the state little choice.

Detroit hasn’t balanced its budget in nearly a decade, except by borrowing. The city has mostly unfunded pension and other obligations that amount to almost $15 billion, with no prospect of being able to pay the portion of the sum that will soon come due.

Last spring, in an effort to avoid the appointment of an emergency manager, Governor Snyder and Detroit officials crafted a clumsy “consent agreement” under which the state was supposed to help the city get the job done. But Detroit’s leaders were unable or unwilling to make necessary changes

Now it is up to Mr. Orr, a bankruptcy attorney who helped steer Chrysler through its successful restructuring, He is not a permanent substitute for democracy; Mr. Orr said he hopes the city can return to the control of its elected leaders in less than a year. That may be optimistic.

But what is worth cheering, even if grimly, is that Michigan’s largest city is finally working to get its house in order. “It’s not Detroit versus Michigan — it’s Detroit, Michigan,” Mr. Snyder said, emphasizing that the fortunes of the state and the city are tied together.

The region — including the Toledo area — is affected. Everyone needs to hope this experiment succeeds.

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