The Herald Bulletin

Morning Update

Breaking News

July 21, 2013

Michigan governor front, center in Detroit bankruptcy

(Continued)

DETROIT —

Detroit's bankruptcy could last at least through summer or fall 2014, when Snyder is expected to ask voters for another term.

"I deeply respect the citizens of Detroit," he said. "They along with the other 9 million people in our state hired me to do this job. They're my customers. This was a tough step, a difficult decision, but it's the right decision."

The first-term governor, perhaps more than any other state's chief executive, hasn't been afraid to confront mounting retiree pension and health care costs hampering state and city budgets. He's done that mainly by signing laws making public workers pay more of their health costs, ending retiree health care for new hires and enticing teachers to contribute more toward their future pensions.

But the stakes could be higher with the Detroit intervention under Michigan's emergency manager law.

Eric Scorsone, a Michigan State University economist and expert on government finances, said while Snyder helped revise the law to make it one of the toughest in the country, bankruptcy likely was inevitable even under the old law — unless creditors had voluntarily agreed to accept far less than what they're owed.

"Other governors may have taken different approaches. But even under the old law, if we had a different governor, it's pretty obvious something would have had to be done," he said.

Scorsone said many other U.S. cities have issues similar to Detroit, though not on the same scale. Other states will be watching to see what happens in part because Snyder — not local elected officials — is taking responsibility for improving public safety and other basic needs, he said.

"I think it's aggressive in the sense that most states don't intervene in local affairs to the same extent," Scorsone said.

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