Michigan governor announces takeover of Detroit

Michigan Governor Rick Snyder announced plans for a state takeover of Detroit, a poster child for urban decay, by declaring the Motor City in a state of financial emergency on Friday.

"Detroit can't wait," Snyder said at a town hall meeting. "We need to solve real issues here today because citizens are not getting the services they need and we have a financial crisis."

The move by a white, Republican governor to take control of a predominantly black and Democratic city has drawn intense criticism and charges of racism.

Supporters say it is the only way to tackle Detroit's seemingly intractable problems.

Emergency managers have the power to eliminate entire departments, change labor contracts, sell city assets and rewrite laws without any public review or input.

Currently in control of four smaller Michigan towns and cities and three school districts, the success rate of such managers is the subject of much debate.

Once the fourth largest city in the United States, Detroit has seen its population shrink by more than half from 1.8 million people in 1950 to 713,000 today.

Racial tensions sparked by the civil rights movement -- and the devastating 1967 riots -- exacerbated white and middle-class flight to the suburbs. Businesses followed suit, further shrinking the tax base.

With less revenue, the city had to cut back on services, prompting more people to leave.

Then the birthplace of the US auto industry saw its main employers go through round after round of mass layoffs as factories were automated or outsourced and Asian competitors siphoned away market share.

After borrowing heavily to keep itself afloat, Detroit is rapidly running out of cash to operate and is expected to end the fiscal year $100 million in the hole.

More troubling are its long term liabilities -- including the cost of pensions and retirement health benefits -- which exceed $14 billion.