There are signs that Detroit emergency manager Kevyn Orr is
moving toward bankruptcy procedures for the city, the
Wall Street Journal reports:
Over the coming weeks, Mr. Orr is expected to ask the city's largest unions, pension funds, creditors and bondholders for concessions. It is unclear whether such moves could stave off bankruptcy—or pave the way for it by serving as a template for a court-supervised reorganization.
A bankruptcy filing likely would be the largest ever by a U.S. municipality in terms of debt outstanding, surpassing that of Jefferson County, Ala. It would follow a decades-long decline of the onetime industrial power, whose population fell 25% from 2000 to 2010 to about 700,000, according to the Census Bureau. In 1950, Detroit crested at nearly two million people.
Under Michigan's emergency manager law, passed by a lame-duck legislature in December after having been repealed by voters in November, Orr can break union contracts and sell off city assets. Last week, the possibility that he would
sell the collection of art at the Detroit Institute of Arts made headlines, though he now says he doesn't plan to do so.
The thing is, Detroit's problems were decades in the making and at this point they're deeply structural—the city's revenue base has been destroyed. Kevyn Orr actually knows that, which is good. But will his answers be about rebuilding and strengthening, or only about cutting and weakening some of the few good jobs remaining in the city?