Sunday, October 2, 2022

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Implications of an emergency fiscal manager for Detroit

Reuters reports that an emergency financial manager might provide Detroit with a path toward bankruptcy. This week I’m at US News writing on how an emergency financial manager might help the city renegotiate the obligations that it cannot afford to pay:

An emergency financial manager will have a greater incentive than elected city officials to improve Detroit’s financial standing. For any Michigan politician, Detroit’s municipal employees make up an important group of voters. However, their political influence is more concentrated at the city level, and as an interest group they have diminished power at the state level. Because the emergency financial manager will be responsible to the governor and state legislature, he or she will not face the pressures to appease city employees that local policymakers confront.