Detroit hires lawyer to contol city debt

The debt-stricken city, once one of the nation's most prosperous manufacturing centres, is now the largest US city to have its finances placed under state control.

Lawyer Kevyn Orr will be Detroit's emergency manager, a position that gives him broad powers to control all spending and override elected officials.

Detroit's population has plunged by a quarter of a million during the last decade and the city remains saddled with a $327 million (£216m) budget deficit and more than $14 billion (£9.25bn) in long-term debt.

The declining population has meant falling tax revenues and the city has introduced mandatory short-time working for its employees.

More than a third of residents are classified as living in poverty, with an unemployment rate of 18.2 per cent - more than double the national US rate.

Mr Orr will have wide-ranging authority to tinker with the city's budget, including renegotiating work contracts, privatising assets and even suspending elected officials' salaries.

A state-appointed review team previously determined that because of Detroit's cash deficit the city would have had to either increase revenues or decrease spending, or both, by about $15 million (£10m) per month for three months starting in January to "remain financially viable."

Those troubles, along with underfunded city services such as police and fire services and the absence of legitimate turnaround plans, ultimately prompted the state to appoint an emergency manager.