Detroit’s “Grand Bargain” a Piece of Cake Compared to Next!

By on June 7th, 2018

MACKINAC ISLAND—Some of the smartest Michigan business leaders and politicians, mostly from Southeast Michigan, talked here last week about growing Michigan’s economy.  Particularly Detroit and other declining urban areas.

Their solution: Convince state voters that we need to first invest in declining cities like Detroit and Flint, that have the ability to produce the wealth and jobs needed to fuel growth across the entire state. This means higher taxes and more private investment, as well as state and federal support.

The conversation took place many times-over during the Detroit Chamber’s Mackinac Conference held at the Grand Hotel, May 30-June 1.  Some 1,700 attended the conference to learn and discuss everything from education and workforce needs, to healthcare and mass transportation.

As Doug Rothwell, President and CEO of Business Leaders for Michigan, said in one session, we need to change our thinking if Michigan doesn’t want to remain dead last in the country providing support for its local communities. He said the basic elements needed are an educated and trained workforce, jobs, income and a healthy economy.

I wouldn’t suggest or propose we should ever expect us to return to Michigan in its heyday, which may not be bad.  Few will argue Michigan needed to change its model and future vision decades ago. It just seems like every time the coffers returned a surplus, all was forgotten until the next state fiscal crisis.  Today, the state is in good shape and local governments across the state are broke and in crisis.

Rothwell moderated one of many conference discussions looking at what needs to be done next to bring back Michigan. His was “Not Open for Business: Why Disinvestment in Michigan Cities is Hampering Economic Opportunity,” sponsored by the Charles Mott Foundation. The panel included U.S. Rep. Dan Kildee (D-Flint), Chris Coleman, Former Mayor of St. Paul (MN), Gordon Krater, former managing partner of Plante, Moran and Anthony Minchin, CEO and Deputy Executive Director of the Michigan Municipal League.

“Progress is being made on the issue, but not where we want to be top,” said Rothwell, chair and founder of the Michigan Economic Development Corporation (MEDC).  “We only provide austerity tools. We need to invest,” he said. “We have to start thinking differently.”  For, example, he pointed out that we have a robust university system, but after graduation Michigan loses between 30-40% of its graduates. How does the state retain this talent?

It will take more than short-term gimmicks like former Governor Jennifer Granholm’s 2004 “Cool Cities Initiative” to stimulate economic growth in Michigan by attracting and retaining a young, highly-educated workforce to stay in Michigan. Just like her pledge to hold public office hours in the Governor’s Office inside the Romney Building lobby, that initiative faded away.

The idea of helping Detroit, Flint and other decaying urban areas will be a hard sell to taxpayers in rural Michigan, who have been been taken down this pathway one too many times. For those who remember, then State Sen. Coleman Young (D-Detroit) and later Mayor of Detroit, worked with former State Sen. William Milliken (R-Traverse City), then the moderate Republican Governor of Michigan to bridge the divide between urban and outstate Michigan in the 60’s.  Back in those days, Detroit was not regarded highly by rural taxpayers whom didn’t have the same jobs or financial resources.  Constitutional and legislatively-mandated revenue sharing had partially leveled the playing field up until last the last decade. But, no more.  Today, Michigan municipalities aren’t getting much help from the state.  For example, since 2002 the Legislature has withheld more than $8 billion in funding earmarked for local governments, according to MSU’s Capital News Service.  The lost funding has forced local governments to forego services like public safety, public health, property maintenance, infrastructure improvement  and capital projects

In earlier times, rural Michigan wasn’t as strapped financially as it is now.  Basic services like police and fire protection, ambulance, infrastructure, water, electricity, roads and sewer, as well as parks, libraries and other public gathering places were supported.

Political protection back then for Northern lower Michigan—and especially the U.P. Peninsula—came from some well-entrenched lawmakers who made sure that those areas received a good portion of state monies and support, including the creation of Lake Superior State University. Even so, legislative funding bills were written in such a fashion that only cities with a population over 1 million could qualify for certain programs, which meant only Detroit.

State Representative Dominic J. Jacobetti, D-Negaunee

That northern Michigan coalition included the late State Rep. Dominic Jacobetti, (D-Negaunee), and Senator Joe Mack, (D-Bessemer), in the western most part of the Upper Peninsula.  Other key UP players late State Rep. Charles H. Varnum, (R- Manistique), represented a portion of the Upper Peninsula for 26 years.  They were followed by Pat Gagliardi, (D-Drummond Island), from 1983 through 1998. Gagliardi served as Democratic floor leader from 1989 until he left the House because of term limits. His one-time Lake Superior State University classmate, former Sen. Mitch Irwin, (D-Sault St. Marie), from 1979 through 1990 and was director of two state executive departments under former Michigan Gov. Jennifer Granholm. 

With no term limitations, Jacobetti was the longest-serving member of the Michigan House of Representatives.  He served from 1955 until his death in 1994, representing Michigan’s 108th and 109th Districts. Mack was first elected in 1964 for two House terms, then won election to the Michigan Senate and served there 26 years, resigning in 1990 after being charged with fraudulently obtaining travel reimbursements.

Now the political landscape has changed, at least in the Michigan Legislature and other state-elected offices.  There is little or no institutional memory or opportunities to forge legislative relationships amongst those serving—or with other state level leaders due to a lack of time: Michigan voters passed term limits with 59% of the vote in 1992.  The result becomes apparent when one looks at the various public policy proposals.

Contrary to early speculation that the constitutional amendment limiting public office holders’ tenture would throw power to state bureaucrats, it has actually swung over to lobbyists. Lobbyists disclosed spending $39.4 million trying to influence state government in 2017.  It’s the second highest total Michigan lobbyists have reported spending in a single year, writes Craig Mauger, of the non-profit watchdog, Michigan Campaign Finance Network.  There were 1,491 interest groups and businesses registered to lobby state officials in 2017, according to the Michigan Secretary of State’s Office.

What this generally means is that smaller rural areas stand very little chance of getting public funds and support on the scale urban areas can expect.  They have neither the needed the political clout nor the money to contribute.  Some headway has been made when rural groups like the northern Michigan Chambers of Commerce band together to form coalitions like the Northern Michigan Chamber Alliance (NMCA).  They work together regionally to maximize the political influence of its 14-county chamber partnership and its more than 6,500 members.

The NMCA establishes its list of legislative priorities annually and works collectively to advocate for issues critical to ensuring assure businesses in northern Michigan are getting more attention and representation in Lansing. For example, they were able to convince lawmakers and agencies like the Michigan Economic Development Corporation (MEDC) that one size doesn’t fit with a need to downsize grants and funding programs to allow for smaller community eligibility.

Recently retired St. Paul Mayor Coleman, worked during his 12 years in office to economically revitalize his community to become on par with its twin city, Minneapolis. Much of that, he claims, came from the regional authority established in the late 60’s that was then operated by 17 commissioners appointed by the governor.  Neither of the communities lost their individual jurisdictions or autonomy but had the authority to work cooperatively where it made sense, like with water and sewer and mass transportation. He also had to raise taxes to increase revenue.

As Flint native Rep. Dan Kildee pointed out, the Flint Water crisis is not the real issue getting national attention.  “It would be a sad story of Flint of it was relegated to water and broken pipes,” he said. “It should be a warning that we fail to provide the resources provided in a civil society…. Flint is not an anomaly, but a warning.”

The Michigan Municipal League’s Minghine added that the underlying problem across the state is that most communities have broken financial systems with no revenue streams.  “If we can’t fix our system, we allow smaller places to have [their] own micro economy,” he said.  “It’s about creating places that attract private money.”  He said political candidates are not talking enough about it in a non-partisan fashion and that the issue should be a part of everyone’s platform.

Whether or not outstate and rural Michigan can be convinced to support proposals like Gov. Snyder’s $8 million Michigan Mobility Challenge grant to address mobility gaps for seniors and veterans across the state is a big question.  Many politicians and headlines suggest that metro Detroit is in dire need of a mass transit, but what about less densely populated regions of the state like Emmet County that includes well-known vacation destinations like Petoskey and Harbor Springs?  The county is one of only two in the state that have no public transportation.

How will Detroit convince other parts of the state that its “economic engine” should to be a priority? This is going to be harder to put together than what was agreed to with Detroit’s “Grand Bargain.” That deal launched Detroit’s swift exit from the nation’s largest municipal bankruptcy in just 16 months.  How leaders in Detroit and other cities like Flint convince the rest of the state that they should be first in line for help remains fuzzy.  Most taxpayers have traveled that path one too many times.

Ken Winter

Ken Winter, former editor and publisher of the Petoskey News-Review and member of the Michigan Journalism Hall of Fame, teaches political science and journalism at North in Petoskey and Michigan State University.

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Charlene S

You’re absolutely right, Ken. I knew that term limits would have a disastrous effect on the State of Michigan governance back in 1992 when I voted no on that constitutional amendment. No organization…especially government…can thrive when its managers lack institutional memory.


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