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Showdown in Detroit is sign of emergency manager's growing power

Detroit's Emergency Financial Manager Kevyn Orr talks to members of the media outside the Detroit Newspapers building about the report he de
Detroit's Emergency Financial Manager Kevyn Orr talks to members of the media outside the Detroit Newspapers building about the report he de

By Steve Neavling

(Reuters) - With Detroit's emergency manager, Kevyn Orr, flexing his political muscle as he scrambles to keep the city out of bankruptcy, the once-heralded Motor City is facing a political vacuum as its ever-fractious officials run smack into the reality of Orr's power.

City Council President Charles Pugh is the latest to reckon with Orr's authority. Pugh, who has missed the last two council meetings and on Tuesday issued a notice he would be on medical leave for three to four weeks, now faces a 5 p.m. deadline imposed by Orr.

Orr ordered Pugh to return to his $77,000-a-year job by the end of the business day Wednesday or else resign. While Orr does not have the power to force a resignation, as the city's emergency financial manager he could withhold payment.

"We expect people to show up for work," Orr's spokesman, Bill Nowling, said.

Pugh has not returned phone calls. He disabled his social media accounts last week.

The standoff with Pugh is the latest in a tangled relationship between Orr and the city government. Already, two city council members have announced plans to leave - with one going to work for Orr's office.

As the most financially troubled of America's large cities in the wake of the recession, how Detroit resolves its situation could serve as an example for other cities facing unsustainable debt and possible bankruptcy. Most of the city's elected officials opposed the appointment of an emergency manager by Michigan Governor Rick Snyder and feared they would be sidelined in the process.

Regardless of how the Pugh saga is resolved, the city council will be down two members after the end of this week, making it difficult for the council to conduct business.

The mayor and the council still run the city day to day, and while Orr's commission is expected to run at least through 2014, their offices will remain intact.

As elected representatives, they continue responding to the public's demands, even as Orr has the power to reach into virtually any aspect of city government-from labor contracts to spending to replacing pension trustees.

Greg Bowens, a political consultant, said Detroit's residents still rely on council members to help them understand the drastic changes taking place under the emergency manager.

"If you have a problem with city government or services, the place to air your grievance is City Council," Bowens said. "You have to give people an opportunity to ask questions of their government."

The question now, however, may be just who can citizens address their grievances to.

Mayor Dave Bing has announced he will not run for re-election.

From the start, Bing and Orr have shadow-boxed. Soon after Orr arrived on the job in early May, Bing sent letters to the city's union leaders, stating that under the emergency manager law the city would no longer bargain with union employees. Orr disavowed the letters, saying through a spokesman that he would meet with unions before making any decisions.

Council President Pro Tem Gary Brown early Wednesday announced he will step down July 1 to take a position working for Orr. Brown, a former deputy police chief, will serve as chief compliance officer for the emergency manager's office.

"Each day that implementation of restructuring is not done, it makes turning around the city that much more difficult," Brown said in a letter to supporters. "Therefore, we must act now."

Brown, a former deputy police chief, was the lone council voice calling for steeper spending cuts and an end to deficit spending as Detroit struggles to right its financial house and avoid what would be the largest ever U.S. municipal bankruptcy.

The Michigan law that created the financial emergency manager position gives Orr virtually unrivaled powers to take action to fix city finance. Financial managers also have taken control of Pontiac, Flint, Benton Harbor and two smaller cities in Michigan under earlier versions of the law.

In Detroit, some politicians are refusing to go along with the new arrangement.

Last Friday, Detroit councilman Kwame Kenyatta resigned, saying he would not work under an emergency manager, a position that he said he considers illegal. "What's the point of the council? There's no more authority," Kenyatta said.

But while Bing has said he will not seek a second term as mayor, Orr's presence has not dissuaded 14 candidates from vying to replace Bing.

Among the candidates are the popular sheriff of Wayne County, Benny Napoleon, as well as three state representatives, a former judge and several community activists.

State Representative Lisa Howze, a mayoral candidate, said the mayor at least can hold Orr accountable. "The mayor will offer another view point," she said. "So people can decide if the emergency manager is doing what's best for Detroit, or if this is just self-aggrandizement."

While most of the mayoral aspirants oppose the emergency manager law, none has made clear what steps could be taken to eliminate a position created by the state legislature.

Even as the politics begin heating up, many questions linger. Orr must decide by January 1 whether he wants to maintain the salaries of the mayor and city council.

And the mayoral contenders must come to grips with the fact that the next mayor will have an extremely limited role in shaping Detroit's financial affairs because Orr has final authority over all budget decisions.

(Reporting By Steve Neavling in Detroit; editing by David Greising and Leslie Adler)

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