Bankrupt Detroit to become a ward of the state

Detroit is bankrupt and becoming more dangerous by the day. Photo: Associated Press

WASHINGTON, February 28, 2013 ― Michigan Governor Rick Snyder will announce tomorrow (Friday) whether the state is taking over the city of Detroit, Michigan’s largest city. A state review team led by treasurer Andy Dillon concluded last week that Detroit is on the verge of financial collapse and recommended a takeover, which would allow Snyder to appoint an emergency manager to take control of the city’s spending.

Detroit, which was once a monument to American ingenuity and success, lies half-empty and financially destitute. According to the review team, it is saddled with more than $14 billion in long-term debt and expectations of an additional $100 million deficit this year.

Detroit Mayor Dave Bing says Governor Rick Snyder told him he would announce his decision tomorrow during a phone conversation today. If, as expected, the decision is to impose emergency management, the city will have ten days to appeal it to the governor.

During World War II, Franklin Roosevelt dubbed Detroit the “Arsenal of Democracy.” It produced 35 percent of the nation’s implements of war: tanks, bombers and Jeeps. Now it has become an exhausted ghost town.

With a population of 1.6 million in 1929, Detroit was the fourth-largest city in the country, with more than 10 percent of its workforce working in the auto industry. The city’s population peaked in the 1950’s at 1.8 million, with the greater metro area being home to 5.2 million. Today, Detroit has just over 700,000 residents. Home values have plummeted, with thousands of single family homes priced between one and five thousand dollars. At least many are condemned, and tens of thousands more have been simply abandoned.

When interim Police Chief Chester Logan reported 2012 crime statistics last month, he made the sombre statement, “we’ve lost respect for life.” That same day a Detroit woman was charged with fatally stabbing her eight-year-old daughter.

Many believe that by down-sizing and consolidating, Detroit can make a recovery. Mayoral candidate Lisa Howze, a former state representative and a certified public accountant, accused the review team of deliberately inflating Detroit’s debts to make a case for appointing an emergency manager. She argues that the city’s debt is only $2 billion, and that the long-term obligations should not be included as part of the current debt load. According to Randy Lane, owner of an auditing firm that has helped the city prepare its financial reports since 2006, “It appears from the review team’s report that they created as much misery as possible to present a picture of the city of Detroit that’s not supported by the audited financial statements.” 

Others point to decades of intractably bad city government to argue that the city cannot be trusted to reform itself, and many doubt that saving the city is worth the cost. A spokesman for Dillon pointed out that the review team’s report, based on the city’s most recent annual audit, “speaks for itself and is very clear on the city’s long-term liabilities.”

Ancient and eroding infrastructure has contaminated Detroit with unacceptable levels of lead, poisoning its children and making it necessary to test all children under six years of age every year. Studies have linked these high lead levels to drastically reduced academic testing scores, further perpetuating the cycle of poverty.

Whether you blame China, domestic politicians, or climate change, the sad fact is that one of America’s most historically significant cities – filled with abandoned, decaying factories and beautiful works of rotting architectural art – is dying.

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Mike Shortridge

Mike is a former Marine who served in the Middle East. He is disgusted with both the Republican and Democratic parties, seeing them as two heads of the same beast. He writes from the conservative perspective, with a focus on making complex subjects easy to understand.


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