Already a picture of urban decline, Detroit has become the largest US city to file for bankruptcy to try to resolve debts which have reached $18.5 billion (14 billion euros).
The budget deficit, unemployment and the murder rate are all soaring. Public services have all but collapsed and the population has more than halved since 1950.
“When I took office over four years ago, I said Detroit was in a financial crisis and we tried to work out a way through the situation over the last four years, but it has been very very difficult,” said the Mayor of Detroit, David Bing.
At stake are the future pensions and retiree health benefits of city workers.
If it is approved by a judge, the bankruptcy would force creditors into negotiations and could enable the city to liquidate assets.
“As far as things are concerned for the provision of services and the conduct of city business, it is business in the ordinary course: services will remain open, pay cheques will be made, bills will be paid, nothing changes from the standpoint of the citizens’ perspective,” said Detroit Emergency Manager Kevyn Orr, appointed by the state to run the city since March.
Once Detroit symbolised the strength of the American car industry. General Motors, whose headquarters is still there, said in a statement that this was “a day that we and others hoped would not come. We believe, however, that today also can mark a clean start for the city.”
Now the Governor of Michigan state, Republican Rick Snyder, says Detroit simply can’t raise enough revenue to meets its obligations.
But unions have accused the governor of using bankruptcy to try to seize power.
“This is not about fixing the city’s finances. It’s about the governor and his own agenda to take over the city of Detroit,” said Ed McNeil, chief negotiator for a coalition of 33 unions that represent most of the city’s service workers.