DETROIT—Michigan's governor plans to appoint a financial manager to oversee Detroit, saying the state's largest city is contending with a fiscal emergency.
Republican Gov. Rick Snyder said he has a top candidate to fill the post but declined to say who that person was.
At an invitation-only town-hall meeting on the campus of Wayne State University, Mr. Snyder called it a "sad day" that he "wished had never happened." But he said the emergency manager would also bring the financially troubled city new promise.
"It's time to say that we should be moving forward," the governor said.
Detroit's mayor, who had opposed the appointment of an emergency manager, on Thursday struck a conciliatory tone, saying instead of fighting those in the Snyder administration, "I want to work with them." But Mayor Dave Bing, as well as the city council, didn't attend the announcement, and it was unclear whether they would try to block the emergency-manager appointment in court.
The announcement came about a week after a report from the six-member review team appointed by Mr. Snyder found that the city is running out of money and funds its current obligations by borrowing. Its long-term liabilities—estimated at $14 billion—have grown, especially in pensions and health care for retired city workers.
City leaders, including several candidates for mayor this fall, challenged that assessment, saying the liabilities are largely held in the city's sewer and water department, which has a steady stream of revenue to cover those obligations. Mike Duggan, a former Detroit hospital executive and one of the leading candidates for mayor, said in an interview last week that he believes an emergency manager won't be successful, because only elected leaders can attract the right mix of talented administrators needed to turn around the city.
If approved, the official appointment for the emergency financial manager will come from a three-member board appointed by the governor. The board must wait 10 days after the governor's declaration of a financial emergency in the city, an announcement that could come as soon as Friday. The city can appeal during that period.
Mr. Snyder said he expects the emergency manager to stay in place for at least 18 months.
The emergency financial manager would have sweeping power to set the financial direction of the city. The appointee also would have the ability to break municipal labor contracts starting in March when a new state law takes effect. Elected leaders in Detroit could lose their jobs, but the emergency manager could also retain some of them by setting new salaries and modifying duties.
The emergency-manager appointment would be a failed end to a power-sharing agreement in April that gave the state more financial oversight in exchange for financing to help Detroit avert bankruptcy protection.
Mr. Snyder has said he grew frustrated with what he saw as a lack of progress in enacting systemic reform called for in the agreement. The city's financial problems have been compounded by disagreements between its mayor and the city council over the scope of overhauls and an effort by the city's legal counsel to block the agreement with the state.
