Governor Rick Snyder has said declaring the US city as bankrupt is an "opportunity to stop 60 years of decline in Detroit".
He told a press conference: "That's why we wanted this, to reassure the citizens of Detroit that normal operations will continue. People will be paid, people can do services.
"I don't view this as a terrible answer. Now is our opportunity to stop 60 years of decline. This is fundamental."
Once a powerhouse of the US car industry, Detroit has filed for bankruptcy as it owes creditors almost $20bn it cannot pay.
Detroit, once a booming American metropolis, has become the largest US city to file for bankruptcy, with debts of at least $18bn.