Detroit consigned to an unnecessarily bleak future?
Dec. 21, 2011 — In a Nov. 16 speech, Detroit Mayor Dave Bing told municipal officials, union leaders, and members of the press that, unless changes are made in the budget, the city will run out of cash by April of next year. “Simply put, our city is in a financial crisis and city government is broken,” Bing said. “The reality we’re facing is simple. If we continue down the same path, we will lose the ability to control our own destiny.”
Bing was referring to the now-imminent possibility that Detroit could be taken over by a state-appointed emergency manager. Early this month, the state initiated a preliminary review of the city’s finances, the first step in the process of appointing such a manager.
Are we really going to abandon this city?
Maybe not formally, but when the positive potential outcomes are being described in terms of Detroit (hopefully) managing to eke out a minimalist survival instead of going bankrupt, we think that comes awfully close to abandonment in practical terms.
What if it were a different city — or a different country, for that matter — and people casually talked about how there would need to be a period of 10 or 20 years during which the jurisdiction in question would need to limp along?
Our interest was peaked by the fact that there is no indication that either the Detroit metropolitan region, the state of Michigan, or the federal government is prepared to step forward and make structural changes to re-integrate Detroit in the larger region.
In this week’s article, we look at how proposals to deal with the current crisis ignore or exacerbate long-term problems.
In part two of the series, we will explore why and how Detroit became so isolated within the region, and probe the starkly different narratives told by city officials and advocates as compared with their suburban counterparts.
Finally, in part three of the series, we will examine the nature and plausibility of the solutions — at the local, regional, state, and federal levels— that would need to be put in place if anyone were serious about trying to help Detroit thrive at any time soon.
As bad as the short-term problems appear to be, it is the larger and deeper-rooted structural problems that threaten to leave Detroit’s remaining residents without hope for decades.
“Detroit has been in a downward spiral for years,” said John Mogk, a professor of law at Wayne State University and the chair of the Michigan Council on Labor and Economic Growth. “The scope of the city’s long-term problems is just staggering.”
Many advocates and experts said that the continual focus on short-term funding issues has come at the expense of long-term planning for the city’s future. Indeed, proposals for a short-term fix not only would do little to address Detroit’s structural problems, they may exacerbate them beyond the point of repair.
Those who could leave “packed up and went to the suburbs years ago”
While the debate over the current budget shortfall is contentious (see box below), Mogk and other experts said that those discussions mask larger issues facing the city. “Balancing the budget is the least of Detroit’s problems,” he said. “These proposals are Band Aids.”
Detroit’s population has declined steadily since its peak at 1.85 million in 1950, when the automotive sector was thriving there. According to the U.S. Census Bureau, between 2000 and 2010, Detroit’s population fell by 25 percent, from 951,270 to 713,777, the largest decline in any large American city except for New Orleans in the years after Hurricane Katrina. The population in Detroit is currently the lowest it has been since 1910.
That population loss has left many Detroit neighborhoods abandoned. Other neighborhoods are spotted with vacant houses and open plots, and images of Detroit’s ruins are what comes to mind for many people when they think of the city. 2010 Census Bureau data showed that 25.8 percent of housing units in Detroit were vacant.
“Most of the people who could afford to leave have already left,” said Joe Darden, assistant professor of geography at Michigan State University. “Everybody who could, packed up and went to the suburbs years ago.” That regional migration has had a distinctly racial cast (see box on next page).
The poverty rate in Detroit is nearly 30 percent, a quarter of the city’s residents are unemployed, 31.5 percent receive welfare benefits or food stamps, only 11.8 percent of residents 25 years old or older have a bachelors degree or higher, and the per capita income is $15,062. According to the Brookings Institution, between the years 2000 and 2009, Detroit saw one of the largest increases in “concentrated poverty,” which is a measurement of the spatial proximity of people living in poverty. People living in concentrated poverty have been shown to be far more likely to become pregnant as teenagers, drop out of high school, and remain jobless than people who are in poverty but live in socio-economically mixed neighborhoods.
“If you didn’t finish high school and you have a criminal record, you become almost unemployable,” said Myron Orfield, director of the Institute on Race and Poverty at the University of Minnesota. “That becomes a barrier to growth in a city when businesses don’t have access to a skilled workforce.”
The short-term crisis
In his speech, Bing said that Detroit faces a $45 million cash shortfall by the end of the fiscal year, meaning that it could run out of cash and be unable to make payroll as early as the end of this month. To fill that gap, the Mayor has proposed cutting the pay of police and fire department employees by 10 percent, asking city workers to contribute more to their health plans and pensions, privatizing some city services such as lighting and transportation, and laying off up to 1,000 municipal workers.
The City Council, which has long pushed for deeper cuts in the City budget, has offered a more drastic proposal, including deeper union concessions and up to 2,300 layoffs, more than 17 percent of the municipal workforce. According to a spokesperson for City Council President Pro Tem Gary Brown, “The Councilman believes that the situation is much worse than the Mayor has described.”
Negotiations with the City’s 48 unions are currently ongoing. The City has asked the unions for concessions several times in the last few years; most recently, the entire City workforce except for the police and fire departments accepted a 10 percent wage reduction, and most unions have changed pension plans for new hires.
The possibility of an emergency manager
Michigan has long had a law that allowed the state to appoint a manager to take over the responsibilities of local government officials if municipal finances deteriorated to a certain point, or if municipal officials are deemed corrupt or incompetent. In 2010, under newly elected Republican Governor Rick Snyder, the state passed Public Act 4, which gives those managers broad new powers, including the ability to change collective bargaining agreements and even dissolve a municipality entirely.
Eyes off the prize
But according to John Mogk, a professor of law at Wayne State University and the chair of the Michigan Council on Labor and Economic Growth, the current efforts to deal with the City’s shortfall will not address any of Detroit’s long-term problems. “Let’s say the state wrote a check and covered the deficit and the budget was balanced today,” he said. “That wouldn’t change the underlying picture. Detroit is in free fall. It has nothing to do with this year’s budget.”