Change is Only Guarantee in Detroit Situation
March 16, 2012
DETROIT — There is now no doubt that the state will soon take effective control of the city of Detroit, one way or another.
The city is on the point of financial collapse. Detroit expects to run out of cash to pay its bills in April or May. Borrowing more isn’t an option. The city is $33 in debt for every dollar it has in assets.
There are more than twice as many city retirees drawing pensions and health care as there are employees.
None of this is a surprise. The law says when any city can’t pay its bills, the state has to take over.
But when the governor tried to throw the city a lifeline, the reaction of Detroit’s elected leaders might seem astounding to any rational person who has been following Detroit’s long agony.
Not only have they not taken any steps to prevent the city from collapse, many seem to be out of touch with reality.
That was never more clear than Tuesday (March 13), when Gov. Rick Snyder offered the city a proposed “consent agreement” aimed at bringing radical change and fiscal responsibility to Detroit, to give it a shot at a future.
Essentially, it would establish a nine-member “financial advisory board” with vast powers to structure city government and finances. Mayor Dave Bing and Detroit’s nine-member council would lose some — but not all — of their powers.
They would also have a role in restructuring the city, and would be able to appoint some members of the board.
The consent agreement, which needs to be accepted by the mayor and council, was clearly an attempt at compromise, to avoid appointing an emergency manager who would assume all power.
But when the details were known, the mayor and city council angrily rejected it. The mayor, who had earlier seemed inclined to favor a consent agreement, said the agreement “does not represent the spirit of partnership needed.”
Councilwoman Saunteel Jenkins said the council should insist on playing a role, and added, “I think it has been shown that when we wait for other people, we are often left out.”
Which, ironically, part of how all this happened.
The governor said he hadn‘t wanted to become involved, but felt he had no choice. “For several months I have made it very clear through my discussions with the mayor that the best possible outcome would be for the city to develop its own workable plan.
“Over time it has become increasingly clear that may not come to fruition.” Which was a diplomatic way of saying that city leadership has shown no signs of taking the hard steps needed just to prevent running out of money, let alone finding long-term solutions.
Someone who has served as an emergency manager in another Michigan city said he was impressed by Snyder.
“You have to commend the governor for attempting to sweeten some medicine that may not taste too good. For trying to give the city something they can accept and that solves the problem without bringing in an emergency manager.”
But there was no sign of any gratitude on the part of city officials. The day after he put forth the agreement, the governor said he had expected the early reaction to be negative.
“The real question is, how do we solve the problem? How do we get better basic services to Detroiters? How do we get to financial stability? So let’s focus the discussion on that,” he added.
Unfortunately, too many Detroiters didn’t seem willing to do that. There was muttering that this was a case of outstate Republican whites imposing their will on poor black Democrats.
U.S. Rep. John Conyers, facing a tough primary election fight in the city, charged that the agreement “essentially asks the city to forfeit its citizens’ rights for no tangible benefit.”
Others simply clamored the state to give Detroit more money, no strings attached. Perhaps the most bizarre idea was that of State Sen. Virgil Smith (D-Detroit) who made the suggestion that the state allow the city to levy its own sales tax.
Nobody is in a mood to trust Detroit with more money. The day the consent decree was announced, it was also revealed that Detroit is forfeiting $72 million in federal aid meant for the poor.
Why? Because the mayor had to shut down the city department of human services, thanks to incompetence and corruption. Some of the officials lavishly spent money for the poor on themselves.
Without the equivalent of a managed bankruptcy, it is hard to imagine the 700,000 remaining Detroiters ever getting their heads above water. Nearly half the adult population is functionally illiterate. Mayor Bing estimates the true jobless rate at 40 percent or more.
The governor has said he won’t impose the terms of the consent agreement unless city officials agree to it. But if they don’t, an emergency manager seems certain to follow. However, a possibility exists that the state’s emergency manager law soon may be put on hold, pending a November referendum on it.
However, that would mean the state’s old Emergency Financial Manager law would again be in force. Either way, city officials would lose their power, though EFMs lack power to set aside contracts.
That may well lead to whomever is appointed eventually asking the governor to have the city declare bankruptcy.
Whatever happens, it is clear there are no easy fixes for Detroit. The governor’s proposed consent agreement is designed to essentially allow the city to reinvent itself, and address the decades-long problems resulting from decline and mismanagement.
But that would require Detroit’s elected leaders to agree to lead, and assume some responsibility for a cure certain to be painful and politically hard. So far, that’s what they aren’t willing to do.