Detroit’s bankruptcy will cut deep, impact millions, experts say
The General Motors world headquarters as seen Feb. 24, 2013, in Detroit. Michigan Gov. Rick Snyder has declared a financial emergency there, which could result in the governor appointing an emergency financial manager to oversee Detroit’s municipal government.
The impact of Detroit's historic bankruptcy filing will be deep and widespread, with further cuts expected to government jobs and services and to the pensions of former public sector employees.
The once-mighty Motor City took the "one feasible path" to recovery in filing for Chapter 9 municipal bankruptcy Thursday, Gov. Rick Snyder said in a letter approving the move.
It follows a decades-long decline sparked by an exodus to the suburbs in the 1960s and the rise of foreign auto companies throughout the 1970s and 1980s.
As that industrial base has fallen, so have the city's fortunes.
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Now more uncertainty is swirling in the air as a tough legal battle looms, as well as the potential of laying off municipal employees, selling off assets, raising fees and scaling back basic services like trash collection and snow plowing, which have already been slashed.
“There’s no way Detroit can afford to service 140 square miles anymore,” Michigan State University economist Eric Scorsone told CNBC. “So for parts of the city, if your streetlight’s out, they’re not going to fix it. If your road has massive potholes, it’s going to turn it to gravel. It’s that stark.”
Forty percent of the city's streetlights currently don't work, for example, only a third of its ambulances are in service and a recent report highlighting the city's economic woes put the jobless rate at 16 percent — triple the rate in 2000.
It's currently mired in about $18.5 billion in debt, according to Reuters.
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