WASHINGTON -- Michigan?s Republican governor said Sunday he does not expect -- or necessarily want -- a federal bailout of Detroit as the city struggles to provide services and pay pensions for city workers after becoming the largest U.S. city to file for bankruptcy.
Gov. Rick Snyder pledged that city operations would continue, but he sought to lower expectations that Washington might step in to save the iconic American city. In 2009, the federal government intervened to rescue much of the U.S. auto industry, which is headquartered in Detroit.
The bankruptcy filing ?is a very tragic situation, and this was a very difficult decision, but it's the right one,? Snyder said on ?Face the Nation.?
?If the federal government wants to do that, that's their option,? he said, referring to a bailout. ?The way I view it is I want to partner with all levels of government to stay focused on services to citizens.?
Some have compared the city?s plight to that of a natural disaster, worthy of federal intervention.
But the city?s mayor, David Bing, said Sunday that ?it's very difficult right now to ask directly for support.?
?Now that we've done our bankruptcy filing, I think we've got to take a step back and see what's next,? Bing said on ?This Week with George Stephanopoulos. ?There's a lot of conversation, a lot of planning, a lot of negotiations that will go into fixing our city.?
Vice President Joe Biden said last week it was unclear whether the federal government could play any role in helping Detroit provide services or pay its retirees.
Federal law governing municipal bankruptcies does not provide for the kind of quick restructuring that occurred in the auto industry rescue. Moreover, a federal bailout of Detroit would probably require legislation passed by Congress, which seems almost impossible in the current political environment.
Detroit filed for Chapter 9 bankruptcy last week after Snyder?s appointed turnaround expert, Kevyn Orr, said there was no other alternative. Decades of falling population and fiscal mismanagement, he said, had left the city $18 billion in debt.
The once-thriving home of the U.S. automotive industry has seen its population drop steadily for more than half a century, to 700,000 now from more than 1.8 million at its peak in 1950, leaving the city struggling to provide police, fire and general services across a huge metropolis now pocked with vacant lots and swaths of abandoned buildings.
Orr, who represented Chrysler during its successful restructuring, said the city had few expectations that a federal bailout was coming from Washington.
?We are not expecting the cavalry to come charging in,? Orr said on ?Fox News Sunday.? ?We are out here on outpost and we have to fix it because we dug the hole. And that's the assumption that we are operating on, on how we're going forward.?
Some 30,000 current and retired city workers face a future with reduced pensions. Basic city services exist, but not at ?normal? levels, Snyder said.
At the same time, what to do with decayed structures of Detroit?s core have been a subject of both economic and artistic scrutiny.
Pension liabilities make up the bulk of Detroit?s debt, and Orr, who has been the city?s emergency financial manager for the past four months, said there would likely be changes in the payments retired city workers receive.
?There are going to be some adjustments,? Orr said on ?Fox News Sunday.? ?We don't have a choice. We've crossed the Rubicon on the level -- we have $18-plus billion -- $18 billion to $19 billion in debt and no funding mechanism for it.?
The path forward, however, remained uncertain after a judge in Michigan on Friday ordered a halt to the bankruptcy proceedings, saying they violated the state?s constitution, which bars reductions in public pensions. The state?s attorney general vowed to appeal.
The battle over funding the city?s pensions may reverberate in other troubled cities, including California?s Stockton and San Bernardino, which have also filed for bankruptcy protection.
lisa.mascaro@latimes.com
Twitter: @LisaMascaroinDC
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