So, I grew up in Flint and still live in the area (though outside of the city itself now) and I just wanted to provide another viewpoint on this.
Over the last couple decades, Detroit has been raising the rates for water it sells to other communities. Many communities in Genesee county purchased water from Detroit by way of a pipeline owned by the city of Flint. These communities decided that they'd had enough, set up a new water authority, and went about getting state approval to build their own pipeline to Lake Huron for water since, in the long run, it'd be much less expensive than continuing to buy from Detroit. This pipeline is scheduled for completion in June 2016 (it's even slightly ahead of schedule right now due to unseasonably good weather).
The problem with that is, Flint's most recent contract for water from Detroit ran out in April 2014. At that time, both Flint and Detroit were run by Emergency Financial Managers appointed by the Governor and Detroit was in bankruptcy causing a conflict of interest for the state. Did Michigan want to strengthen Detroit's financial position by forcing Flint to continue buying water from them at a dramatically increased rate? Or, did the state allow Flint to switch to the Flint River as a water source for about 27 months to save money? The state, through its financial manager, decided to switch Flint to Flint River water in the interim.
Here is where the real trouble starts. There's evidence that the state informed Flint's mayor about the need for testing and possibly the adding of anti-corrosives to the water to keep it from leaching lead from pipework but, this information wasn't given to the EFM (who was actually in both executive and legislative control at the time) and it seems strange that said information wouldn't also be sent to whoever was running the actual water system. As I said before, I don't live in the city anymore so I don't tend to watch its politics all that closely now but, I do know that the city council voted to reconnect to Detroit's water system after Detroit made a more sensible offer concerning the price of said connection but, the vote was ignored by the EFM. The mayor at the time was voted out of office last month, primarily over this debacle, and I heard from my brother that the new mayor was on MSNBC last night talking about this situation.
In the meantime, Flint has reconnected to Detroit for its water supply (which they have to pay even more for since they sold the connecting pipeline to the county since the surrounding communities never switched away from Detroit in the first place), rates have gone up (my mother's bill tops $100 every month with minimal usage), and everybody is hoping that the city's water infrastructure wasn't too damaged by the corrosive river water since Flint's treatment plant is supposed to be used for everyone once the pipeline is finished.