Bankruptcy Won’t Fix Detroit

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43rd State Treasurer of Michigan

r-DETROIT-large570Detroit did not have to go bankrupt. And there is little reason to believe the bankruptcy process will result in the rebirth of the city in a form necessary for Michigan to prosper.

The Detroit bankruptcy could have been prevented with more urban friendly policies from the state. However, the last governor to really understand the importance of Detroit to the state, and to be fully committed to helping our cities, was Governor William G. Milliken. His successors, democrat and republican, simply ignored Detroit and, in fact, often pushed policies that encouraged its failure, from limiting mass transit opportunities to pushing through an end to residency requirements for city workers.

It is easy to blame Detroit’s problems on corruption, unions and overly generous pension benefits. None of these factors were the primary cause of bankruptcy.

The main factor was the steady erosion of the tax base and the city’s need to borrow money to maintain even a minimal level of public services. The last time Detroit had a balanced budget was 2005. Michigan was in the fifth year of what turned out to be a 10 year recession, that no one foresaw. Detroit borrowed money to stay afloat which, in hindsight, may have been unwise. But with declining state support (due in large part to major tax cuts accepted by state policymakers, in a futile effort to resurrect the factory economy) , borrowing appeared to be the only option to maintain even a minimal level of public safety and basic services. Better financial management would have helped but would have only delayed the inevitable.

Detroit had several options to bankruptcy; none are practical, given the current political environment that continues the past hostility to the city that has characterized the state’s relationship to its largest city since 1982.

Read the rest of this article by the former Michigan  treasurer on HuffPost Detroit 

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