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Michigan governor to announce Detroit manager Thursday

By Dawson Bell

LANSING, Michigan (Reuters) - Michigan Governor Rick Snyder scheduled a Thursday news conference in Detroit where he is expected to appoint an emergency manager to take over the finances of the state's largest city.

The top candidate for the job is Kevyn Orr, 54, a partner in the Washington, D.C. law firm Jones Day, who worked on the 2009 bankruptcy of Michigan-based automaker Chrysler, said a source with direct knowledge of the choice.

An advisory from Snyder's office set a news conference for 2 p.m. local time (1800 GMT) to "announce his final determination regarding the city of Detroit's financial review." It did not specifically state that he will announce the appointment of an emergency financial manager, but another source with direct knowledge of the governor's decision said it is "highly likely."

Detroit is destitute after years of economic decline, mismanagement and population flight to the suburbs.

The financial manager will have broad powers to run the city, supplanting the elected city council and mayor. The manager could ultimately recommend that Detroit file the largest municipal bankruptcy in U.S. history.

A Michigan state report last month said the city of 700,000 people has been running operating deficits for nearly a decade, is running out of cash and faces a crushing debt burden of some $14 billion from commitments such as pensions and health insurance.

The report also said management of the city is chaotic and gave the example that no one in authority could say for sure how many people were employed in the police department.

Under state law, the manager will have authority to restructure city finances, including the ability to renegotiate labor contracts, privatize services and sell certain city assets. A law passed in December 2012 that takes effect on March 28 will boost those powers, allowing the manager to terminate collective bargaining agreements with the city's 48 unions.

Detroit Mayor Dave Bing and the City Council opposed a state takeover, but Bing last week stopped fighting the appointment. Representatives of the City Council met with the state officials on Tuesday in a final attempt to dissuade the Republican-led state government from taking over Detroit.

Community activists have said a takeover by the state would be resented by many Detroit residents because it would strip citizens of their right to vote for their leaders.

(Reporting by Dawson Bell in Lansing; Writing by Karen Pierog; Editing by Greg McCune and Phil Berlowitz)

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