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Detroit mayor to make final pitch to avoid takeover of city

City of Detroit Mayor Dave Bing talks about the future of the city during an interview in his office in Detroit, Michigan February 5, 2013.
City of Detroit Mayor Dave Bing talks about the future of the city during an interview in his office in Detroit, Michigan February 5, 2013.

By Steve Neavling

DETROIT (Reuters) - Detroit Mayor Dave Bing, a former professional basketball player, may have to hit the equivalent of a last-second shot during a speech on Wednesday to avoid losing much of his authority to a state takeover of the city's financial affairs.

Bing will deliver his annual "state of the city" speech as Michigan Governor Rick Snyder has compiled a "short list" of people who could be named emergency financial manager of the destitute city within weeks.

This may be Bing's last chance to publicly outline a strategy to persuade the state from seizing control.

"He has to lay out a framework of how the Detroit city government on its own is going to fix this financial crisis," city council member Kenneth Cockrel Jr., a former mayor himself, said on Tuesday.

A report due out soon by a review team appointed by Snyder could recommend an emergency financial manager for Michigan's biggest city. If appointed, that manager could in turn recommend the city file for bankruptcy, which would be the biggest ever Chapter 9 municipal bankruptcy in the United States.

Known as the home of the U.S. auto industry, which itself has recovered from near bankruptcy, the city of Detroit actually is home only to the headquarters of General Motors Co. Ford Motor Co. and Chrysler have long been ensconced in the suburbs.

Detroit, also known as Motown for its once-thriving music industry, has shrunk from America's fifth-largest city to 18th in population as residents fled for jobs, better schools and safer streets.

Now home to just 700,000 people, the city is struggling to balance its cost of services with shrinking revenue.

Bing, a former player with the National Basketball Association's Detroit Pistons who later founded a automotive supply company, was elected in May 2009 and has not announced whether he will seek another term as mayor.

Under his administration, the city's finances have gone deeper into the red, ending fiscal 2012 on June 30 with a cumulative budget deficit that ballooned to $326.6 million from $196.6 million in fiscal 2011.

A consent agreement struck between the city and Michigan last April aimed at fixing Detroit's finances has produced slow progress due to a legal battle over the pact and disagreements on reform measures among city council members.

The city's labor costs, including health care and pensions, are shrinking in absolute terms but rising as a share of the budget. They are slated to drop to $968 million, or nearly 49.5 percent of the operating budget in the current fiscal year versus $1.14 billion, or 45.5 percent, a year earlier.

Earlier this week, Snyder confirmed he has a short list of candidates for Detroit's emergency financial manager. There has been speculation that Snyder will pick an African-American to oversee Detroit, which has the largest percentage of black residents of any U.S. city.

The city's outstanding rated debt of around $8.2 billion would make Detroit the largest municipal bankruptcy in U.S. history, almost double the 2011 filing by Alabama's Jefferson County, which involves $4.2 billion in debt.

Detroit's decline has been years in the making. As Bing prepares to speak this week, lawyers elsewhere in the city are presenting final arguments at the trial of one of his predecessors, Kwame Kilpatrick, accused of operating a criminal enterprise to enrich himself, family and friends while mayor.

(Additional reporting by Karen Pierog in Chicago and Tiziana Barghini in New York; Editing by Greg McCune and Todd Eastham)

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