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Politicians spar over Detroit's fate

March 14, 2012: 3:33 PM ET
Cash-strapped Detroit

Cash-strapped Detroit could face state oversight

State and local officials in Michigan are vying for control of cash-strapped Detroit.

Michigan Governor Rick Snyder this week unveiled a bitter prescription to save the ailing city that would put local elected officials in the backseat. And they aren't happy about it.

The city, which is facing a $197 million deficit, received the terms of the governor's fiscal stability deal. It calls for the creation of a Financial Advisory Board, which would oversee Detroit's budget and implementation of its rescue plan.

The board, which would consist of nine members appointed by both state and city officials, would also fill three new positions -- a chief operating officer, chief financial officer and human resources director.

Not surprisingly, the mayor and the City Council are not pleased with the so-called "consent agreement." They would see their power diminished under the deal.

"I'm tremendously disappointed that this consent agreement proposed by Governor Snyder does not represent the spirit of partnership needed between the city and the state to resolve the city's financial challenges," said Mayor Dave Bing, calling Snyder "disingenuous."

Detroit's fiscal troubles go way back. The city has cut back on spending, but it can't keep up with the loss of residents and tax revenue.

If city officials don't agree to Snyder's proposal, Detroit could face a full state takeover. Michigan took control of the troubled city of Flint last fall and appointed an emergency manager to run the city's affairs.

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About This Author
Tami Luhby
Tami Luhby
Senior writer, CNNMoney

Tami Luhby is a senior writer at CNNMoney and covers income inequality, state fiscal problems, unemployment, housing policy and other economic issues. Luhby previously covered personal finance for Newsday and banking for Crain's New York Business.

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