Tags: snyder | detroit bankruptcy

Gov. Rick Snyder: No Other Options for Detroit than Bankruptcy

Image: Gov. Rick Snyder: No Other Options for Detroit than Bankruptcy

By Greg Richter and Sandy Fitzgerald   |   Sunday, 21 Jul 2013 12:44 PM

Though Rick Snyder said in June 2011 that he would not let Detroit go bankrupt, the Michigan governor now says all other options were exhausted before he reversed his decision.

Appearing on two Sunday morning news shows, Snyder said the decision for Detroit to declare bankruptcy Thursday was a tough decision, but the right one.

"There were no other viable options," Snyder said on NBC's "Meet the Press." The city is dealing with the debt issue, he said, and the citizens of Detroit deserve better public services.

If the city had not declared bankruptcy Detroit would have continued going downhill, he said. Public officials have been "kicking the can down the road for 60 years" while the problems festered, he said.

Police response time in Detroit is at almost an hour, and almost half of the city's street lights don't function. More than half its parks have been closed.

The city will continue to be protected by its police and fire departments, said Snyder on CBS' "Face the Nation," despite the bankruptcy, which he said will enable Detroit to continue its normal operations, "but I'll tell you, normal operations are not good enough."

City employees will continue to be paid and come to work, and Detroit residents will still get regular service, Snyder said.

There are also a number of steps being taken to help Detroit residents, because "they deserve a better answer, the wonderful people of Detroit," said Snyder. He said that new Police Chief James Craig has taken office, there are new police vehicles coming in, and there is work being done to improve the police situation, because "58 minutes for a response time is absolutely unaccceptable."

Snyder said officials in the city, state and federal government are also negotiating about bringing down "some of those 73,000 abandoned structures," noting that the city was able to obtain $100 million in grant money to be used for demolition.

The bankruptcy will also help protect the some 20,000 retired Detroit employees who could see cuts in their pensions.

"The retirees who worked hard for the city are on a fixed income, and there's a challenge there," acknowledged Snyder. "The bankruptcy process allows us to it in a more thoughtful way, where they have a seat at the table."

Before, while the city was talking to creditors, nobody would represent the retirees, said Snyder, but "in the bankruptcy petition we've put in, we asked the judge to put together a group of retirees, someone to represent the retirees so they can have a voice at the table."

Through the end of the year, the pensions won't change, but beyond that, "the real question is to the degree the pension plans are funded, because they're not part of this process ... there's a terrible history there of mismanagement, of poor investment, of other things that should get aired out publicly and should be part of this discussion."

Snyder said his heart goes out to retirees who will not be getting their full pension payments, but that he had less sympathy for bondholders.

"If you were lending to the city of Detroit, didn't you understand there were major issues and problems?" he said, noting that the bondholders had been receiving a premium yield on their investment.

On Friday, investors dumped Detroit's municipal bonds a day after the city's bankruptcy filing, even as a ruling in state court raised questions about whether the bankruptcy will stand up to court review.

Snyder said he doesn't expect a federal bailout,  but said that decision is ultimately up to Congress.

Even if the federal government wants to bail out the city, Snyder said, he would rather partner with "all levels of government and stay focused on services for citizens."

Detroit at one time was a city of more than 2 million people, but the population has plummeted down to 700,000.

Still, Snyder is optimistic on Detroit's future. He said on "Meet the Press" that the private sector is working on solutions and that more young people are moving into the city.

"I'm very bullish on Detroit," he said.

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