Detroit elects fix-it CEO as mayor, but his hands could be tied

Mike Duggan, a business executive known for saving the city’s largest employer from near insolvency, will become the next mayor of Detroit in a year the city itself is on the brink of bankruptcy.

Mr. Duggan’s victory is historic – he is the city’s first white major since 1974. However, his skin color never became an issue in the race, and polls had him leading his nearest challenger, Wayne County Sheriff Benny Napoleon, who is black, by a wide margin.

Instead, Duggan won because he successfully presented himself as “a turnaround agent,” says Robin Boyle, chair of the urban studies and planning department at Wayne State University in Detroit. His experience in making the Detroit Medical Center (DMC), a coalition of eight hospitals, profitable in eight years was heralded by supporters who say his business acumen is what Detroit needs as it faces restructuring of its finances by a federal bankruptcy judge.

“There is a clear concern, a deep concern from the neighborhoods, that whoever is going to be running this city post-bankruptcy has got to have a clear sense of how the business of the city works,” says Professor Boyle. Duggan’s victory, he adds, is less about ideological debates, and more about the desire to find “someone who can roll up his sleeves.”

Duggan beat Mr. Napoleon, 55 to 45 percent. But it is unclear how much authority he will have going forward. Indeed, when Duggan assumes the mantle from current Detroit Mayor Dave Bing, who is stepping down after serving a full term in office, he will be forced to find a more conciliatory tone with Kevyn Orr, the emergency manager sent to Detroit by Michigan Gov. Rick Snyder (R) to assume total control of the city’s finances.

Experts say that Duggan’s role will be limited as long as Mr. Orr’s team remains in Detroit.

The city's liabilities are at $18 billion, and Orr’s team of restructuring experts are in the midst of trying to persuade a federal bankruptcy judge to allow them to file for Chapter 9 bankruptcy protections on the city’s behalf. The trial’s closing arguments are set for Thursday.

During the election, Duggan stressed that he opposed Orr’s appointment and said he will work to remove his post as soon as possible. It is unclear how long Orr will remain calling the shots in Detroit; the city council or the federal judge could renew his current tenure. What is known is that Duggan will need to establish an immediate relationship with Stacy Fox, Orr’s deputy, who is overseeing city operations and tasked with easing the transition.

Governor Snyder released a statement Tuesday saying his administration is “committed to working collaboratively” with Duggan and said the new mayor’s “financial acumen and experience in turning around the Detroit Medical Center and other entities should serve him well in his new role.”

Orr also released a statement saying that he, too, looked forward to working with Duggan “to build a vibrant and strong future the citizens of Detroit deserve.”

But some experts think Duggan will have a tough time wielding much authority so long as Snyder and Orr are in charge.

“He’s not going to have a lot of success with Governor Snyder,” says Ed Sidlow, a political scientist at Eastern Michigan University in Ypsilanti.

Tensions are high. Unions representing current and former public workers are worried that, if Detroit is granted Chapter 9, Orr will present the judge with a plan that includes cuts to health care and retiree benefits. The new mayor, like outgoing Mayor Bing, can provide suggestions, or serve as an advocate for the workers, but ultimately, he will have little authority in the final outcome.

“When the cameras get turned off and the new mayor goes to work, it seems to me the first thing that has to be dealt with is not only the bankruptcies, but the more personal impact of the bankruptcies, such as the pensions," says Professor Sidlow. "You have a whole generation of folks who in good faith worked for the city whose pensions are now in peril. Those street-level questions brought about by the bankruptcy are what he’s going to have to answer.”

Big labor remains wary of Duggan, saying his efforts to block nurses from organizing during his tenure at the DMC is a sign he may not have unions' best interests at heart in dealing with Orr.

Labor groups in Detroit have “had mixed experiences” with Duggan “over the course of his business career” but “expect him to honor his campaign commitments to protect retirees, resist privatization,… and make Detroit’s economy work for all residents,” said Chris Michalakis, president of the Metro Detroit chapter of the AFL-CIO, in a statement Tuesday. “We look forward to working with Mayor Duggan towards those ends.”

The new mayor will need to work with the state to ease the transition, rather than create roadblocks that will ultimately impede immediate needs, such as shoring up funds for emergency services, street light repairs, and more, experts say.

Duggan appeared eager to establish good faith.

“It will be easier if we have a positive and constructive relationship with the governor and emergency manager,” Duggan told the Detroit News Tuesday before polls closed.

Snyder did not endorse a candidate, but said he hoped his team could create a positive relationship with the new administration.

Speaking at a luncheon at the Detroit Athletic Club Tuesday, he said, “There’s a lot of work to be done. It should really be all-hands-on-deck to work together.”

Also helping Duggan was money. According to Crain’s Detroit Business, "super political action committees" backing Duggan raised $1.46 million by late October, while Detroit Forward, which supports Napoleon, raised $303,750.