Mich. governor defends Detroit bankruptcy bid

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DETROIT -- Gov. Rick Snyder of Michigan, in testimony Monday, forcefully defended Detroit's bankruptcy filing as a last-ditch effort to stem the city's decades-long financial decline.

"This is a crisis," the Republican governor said in U.S. Bankruptcy Court. "It still is a crisis today."

The governor's highly anticipated testimony came at a pivotal point in the trial on whether Detroit met federal eligibility rules when it filed for Chapter 9 bankruptcy. Mr. Snyder had been subpoenaed by union lawyers trying to block the bankruptcy and its potential to undermine pension benefits for thousands of city workers and retirees.

The governor -- a former venture capitalist and computer executive -- approved the bankruptcy filing July 18 on the recommendation of Kevyn Orr, whom Mr. Snyder had selected in March as Detroit's emergency manager.

Mr. Orr also testified Monday and gave a detailed description of Detroit's mounting debts, substandard city services and lack of options for a turnaround.

According to its Chapter 9 filing, Detroit is an estimated $18 billion in debt, including billions of dollars in obligations to its 23,000 retirees. The city is running a budget deficit of almost $1 million per day, and is unable to provide basic levels of police and fire protection for its 700,000 residents.

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