This editorial discusses the advantages and pitfalls of three possible scenarios for returning Detroit to solvency.
The political costs have yet to be reckoned, but many Michiganders believe that Gov. Rick Snyder's decision to initiate a financial review that could trigger the appointment of an emergency manager to oversee Detroit marks the beginning of a new era of fiscal accountability for Michigan's largest city.
Most observers anticipate that a determined financial manager will quickly impose labor concessions that elected politicians have been either reluctant to demand or unable to secure. Nearly everyone anticipates widespread layoffs, the sale of municipal assets, and unprecedented reductions in residential services.
But those who appreciate the seriousness of Detroit's fiscal emergency increasingly believe that even the appointment of an emergency manager may only be a stopping-off point on the way to a full-fledged bankruptcy reorganization. In their eyes, Detroit won't be set on a path to sustainable solvency until its affairs are in the hands of a federal bankruptcy judge.