Flint's basically bankrupt and the state wants to delay the inevitable, so they installed an "emergency manager" with all the powers of mayor+city council (but accountable only to the governor). The emergency manager wanted to save money by using a local source of water instead of paying Detroit for water. The Michigan Department of Environmental Quality basically knew that the water was so acidic that it would eat through the biofilm on the pipes and start leeching lead (and discussed as much in emails), and gave incorrect advice on measurements to the city to try and hide the problem.
I can't tell you the exact reasons, but I would suspect it all comes down to money. I grew up just outside of Flint, went to school in the city, and worked there for a few years. There were winters where the city couldn't afford to plow the roads. They had to lay off most of the firefighters 5 or so years ago, along with much of their police force. It is a struggling area, maybe not quite as much as Detroit, but close to it.
