Michigan May Take Over Detroit… Tomorrow
Detroit could become the largest-ever American city to be taken over by its state government—as early as tomorrow. Michigan Gov. Rick Snyder apparently spoke with Detroit Mayor Dave Bing this morning and plans to announce seizure of Detroit’s administration tomorrow, according to various news reports. Bing shouldn’t be surprised, though. Snyder has been threatening debt-ridden Detroit’s independence since last year, and it appears the proverbial shit has finally hit the fan.
On Feb. 21 Snyder made a video explaining Detroit’s problems, including overspending, excess borrowing, ballooning retirement obligations and inefficient corrective action taken by the city. Snyder also the city’s charter is inflexible and doesn’t allow for change. All Snyder has to do it appoint an emergency financial manager, and Bing as well as Detroit’s elected council members will be left utterly powerless. Of course Bing doesn’t like that sound of that.
“This is our city,” he said. “Detroit needs to be run by Detroiters.”
Well “Detroiters” have been doing a pretty crummy job in recent years. Although Bing now says the city can eliminate its $150-million deficit on its own, just last month he called Detroit’s city government “broken” and said Detroit’s accounts will come up $45 million short next year if the city doesn’t start saving money and quick. Of course he doesn’t want to hand over control, and has now proposed laying off 1,000 employees—9 percent of the city government workforce—and negotiating a 10-percent pay cut with unions.
But experts say that won’t be enough. The nonpartisan Citizens Research Council analyzed Detroit’s finances in 2010 and warned restructuring was necessary. The city simply spends too much money with its own airport, health service, water agency and streetlight department and city-manned waste disposal. Sheila Cockeral—who worked with the council at the time—told USA Today Detroit’s budgetary woes would not be solved until it charged its pension system to a 401(k) style plan and charges city employees, as well as retirees, more for health insurance premiums.
“The entire structure of the city reflects a 1950s model in which the United States was the dominant economy of the world and automobile manufacturing was the core driver,” said Cockrel, who teaches at Wayne State University in Detroit. “None of that is true anymore.“
Cockrel has an extremely valid point, too. Detroit has struggled as the auto industry that calls it home has collapsed—slashing the city’s tax base and cutting its population by 25 percent in the last decade alone. Yet Detroit is still trying to do business as if it had the same steady cash flow from its glory years. Something has to give, and if the elected leadership can’t get it done, Snyder is not going to wait for the city to go bankrupt.
And emergency financial manager could privatize Detroit’s utility companies and bus system, sell off city assets and negotiate new collective-bargaining agreements with the unions. Yeah it might suck for a while, but it’s a long time coming and better than the alternative.
I want more stuff like this!