Detroit, Meet Your New Budget Boss, Kevyn Orr; His Leadership, Not Your Mayor's, Will Decide Your Fate

Detroit, meet Kevyn Orr.

He’s your new state-appointed budget boss, and he’s going to be with you for a while, looking closely at your spending habits, trying to figure out how to deal with your $327 million accumulated deficit, your $14 billion in long-term debt, your 18.2 percent unemployment rate, your month-to-month budget drawn from a state-managed escrow account, your population exodus that’s battering your tax revenue base, and your bleak landscape filled with so many blighted homes and empty lots that a local journalist golfed across you last summer.

Unlike the country’s largest automakers that call you home, you aren’t likely to be receiving any federal bailout. Without the intervention by the state, you were months or weeks away from being as broke as a third of your dwindling number of residents. Not since the financial crisis of New York City in 1975 has an American city come so close to becoming the nation’s biggest-ever municipal bankruptcy.

Your situation has been so dire for so long, Detroit, that last year you borrowed $129.5 million in part to pay off past loans, much like some of your low-income renters who juggle credit cards to pay for groceries and utilities. If anyone has reaped profits off your woes it has been Wall Street, which has made $474 million in fees to handle your bond issues, according to a recent Bloomberg News report.

Saying your local government bears “operational dysfunction,” Gov. Rick Snyder on Thursday named Orr your emergency manager. This came after the state on March 1 took you over, making you the largest city in American history to ever receive such an intervention. And, whether your City Council likes it or not, your fate rests not in the hands of current Mayor David Bing, but rather a 54-year-old University of Michigan alum and prominent commercial litigation lawyer.

“We need to end the drama and infighting and understand that, whether we like it or not, an emergency financial manager is coming to Detroit,” the mayor said in a press statement this week, aiming to quell opposition in the City Council to outside intervention. It seemed to help; the council backed down from threats of a legal challenge to the governor’s decision.

But, dear renowned birthplace of Motown music, you can rest assured at least that you’re in competent hands. Orr is a skilled litigator who helped manage the bankruptcy of one of your biggest local employers, Chrysler LLC, in 2009. He will be in complete control of your contracts, assets and public workforce. He will also have considerable sway in any decision to move to Chapter 9 bankruptcy if he finds no other solution to your woes, particularly your ballooning public employee pension obligations. The fact that Orr is an expert on bankruptcy might provide a clue as to where you’re headed, but whether you end up there will be decided in the coming months.

So good luck, Detroit. America hopes you prevail in the end.