DETROIT—Once the powerhouse of American manufacturing, the city of Detroit is poised to fall off a financial cliff Friday, unless the state of Michigan coughs up $80 million urgently needed by the city to keep it running.

The financial crisis comes just weeks after Mayor Dave Bing shocked America by announcing plans to save Detroit money by cutting off street lighting to large swaths of the city.

Detroit — America’s 19th largest city with a population that has now shrunk to just 713,777 people — has been on life support since April, when the mayor and city council approved an agreement that essentially hands over control of Detroit’s finances to the state of Michigan.

But last week the city’s lawyer, Krystal Crittendon, who was never consulted on the deal, filed a lawsuit arguing the agreement was illegal because it contravenes the city’s charter.

The charter says the city cannot enter into agreements with parties that owe it money. Crittendon’s lawsuit alleges the state of Michigan owes Detroit about $220 million, and she is asking a judge to strike down the agreement. A ruling is expected Wednesday.

But last week the state responded angrily, saying that if the suit stands, it will cut off crucial funding to Detroit starting Friday.

Mayor Bing hopes it won’t get that far. At an emergency meeting Monday, he demanded that the suit be dropped immediately, saying the city must respect the state’s role to ensure the city’s survival.

“We want to push this (co-operation) forward as fast as we can so we can get the cash to run the city,” he said. “Without that we’re dead.”

In a city that has been besieged for decades with problems, Monday’s meeting underlined yet another: the crucial divide that exists between Bing and his council. Several councillors defied the mayor, backed the city’s solicitor and unloaded on the state of Michigan.

Councilwoman JoAnn Watson called the state’s threat nothing less than “extortion,” a claim that raised cries of support from vocal citizens who had crammed into the public gallery of a 13th-floor meeting room of the Mayor Coleman Young Building in downtown Detroit.

A greying Mayor Bing, once a beloved NBA star for the Detroit Pistons, was getting no support from the citizens in attendance, most of whom were old enough to remember when Detroit was the main engine driving America’s economy with jobs galore at the city’s automotive plants.

Today, it is city services that provide the bulk of Detroit’s jobs.

The Detroit public school system is the city’s main employer, with more than 13,000 jobs. No. 2 is the city of Detroit itself with 12,400. Third is the Detroit Medical Center with 10,500 positions.

Manufacturing in the city has plummeted from 271,600 jobs in 2006 to just 187,800 in 2010.

Unemployment in the city was running at 20.2 per cent last year, compared with 10.4 per for Michigan and an average 8.9 per cent across the U.S.

Detroit and the state of Michigan seem powerless to reverse the trend. Many at Monday’s meeting feel betrayed by the state as well as the Bing administration.

“I’m tired of the state of Michigan running roughshod over the city of Detroit,” said Les Little, a former broadcaster-turned-activist who said he backed the legal challenge to the state’s hand in city finances.

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“But the main problem here is one of leadership,” he said. “We’ve had a succession of bad mayors.”

Little says he has been trying to mount a campaign to remove Bing.

Sandra Hines, a 58-year-old teacher and guidance counsellor-turned-activist said she has witnessed a troubling transformation of the city over the past few decades.

During that time, much of inner-city Detroit, especially the downtown, has been bulldozed to make way for major entertainment venues and upper-middle-class housing, including condominiums.

Over the past two decades the city core has started to sparkle a bit: a new baseball park and a massive new football field have been constructed, as well as several new casinos. The Ilitch family, which owns the Detroit Red Wings, is preparing to build a new hockey stadium.

But in this transition, many poor as well as middle-class black residents have been driven from downtown, says Hines.

“Now we have two Detroits,” she says. “There is downtown, where the people from the suburbs come in to play and watch. And then there is the rest of the city outside downtown, with abandoned homes and fields of grass that grow to six or seven feet high that they don’t even cut.”

Meanwhile, libraries have been closed, the quality of education has slumped and there has been a spike in crime.

Cutting street lighting isn’t anything new, she insists. The current financial crisis has just given Bing’s administration an excuse to formalize it as a public policy, she says.

But it will not help, she says. “People are already afraid in this city. You can’t deny it.”