Michigan Governor Rick Snyder, officially declared today that Detroit is in fiscal emergency. According to the governor, he will appoint an outside manager who will supervise the finances of the largest city of the state. According to report, Snyder has a top candidate in mind for the position.

Rick Snyder

Snyder said, “I look at today as a sad day, a day I wish had never happened in the history of Detroit, but also a day of optimism and promise.” According to him, Detroit was one of the most prestigious cities in the United States that “went from the top to the bottom over the last 50 years” and lost more than 50 percent of its population.

“Today is a day to call all hands on deck. We need to start moving upward with the City of Detroit,” added Snyder.

Snyder explained that his decision was prompted by findings of the state review team that the city is under a severe financial situation wherein it has more than $14 billion long-term debt. The review team also noted that Detroit almost suffered a $900 million budget deficit in fiscal 2012, if it did not borrow substantial amount of money.

According to Andy Dillon, state treasurer and a member of the review team, Detroit’s financial situation is a strain and “the city is running deficits since 2005…masking over those with long-term borrowing.”

Under Michigan Law, Mayor Dave Bing has 10 days to request a hearing with the governor regarding his decision. After the hearing, the governor may withdraw his decision or appoint an emergency manager.

The mayor and members of the city council will continue performing their responsibilities for the city. The primary responsibility of the emergency manager is to supervise and make decisions involving financial matters.

According to Snyder, he is considering several individuals to serve as Detroit’s emergency manager. He pointed out that the person who will be appointed in the position must be a “people person” with a strong professional background.

Prior to Snyder’s announcement, Mayor Bing said he was aware of the governor’s decision and he is ready to work with the state to resolve the problem. Bing said, “I think we have to learn to make the best out of a bad situation, The state and the city will have to work together to get us out of this. I never fought help; I never pushed back. I’m a team player.” 

It is interesting to note that auto makers in Detroit including General Motors Company (NYSE:GM), Ford Motors Company (NYSE:F), and Chrysler Group are expanding their production and hiring more workers.