Snyder must revive Detroit
On Dec. 8, Gov. Rick Snyder, Republican of the Great Lakes State, penned an opinion piece for the Detroit Free Press in which he outlined his administration’s involvement in the city of Detroit. The piece was also a rejoinder to an editorial by the Detroit Free Press which called into question his leadership and commitment to the city.
I have praised Snyder’s involvement on multiple occasions, but the editorial by the Detroit Free Press raised the need to put that praise into perspective.
In his column, Snyder writes that “U.S. bankruptcy Judge Steven Rhodes’ ruling last week affirms that the path we have embarked upon is the most viable option to address Detroit’s fiscal crisis and provide the essential services that residents need and deserve.”
The line, “the path we have embarked upon is the most viable option to address Detroit’s fiscal crisis,” is true. There were no other options.
To be sure, however, as Snyder extended out his hand to help the city, he and the state Legislature – controlled by Republicans – surely undermined the city’s finances.
A database compiled by the Lincoln Institute of Land Policy shows how much state aid Detroit received every year from 1977 to 2010. In 2000, the city received an estimated $2.36 billion, $2.15 billion in 2004, and $1.94 billion in 2008.
In 2011, the year Snyder came into office – based off of data from the Pew Research Center on the States, the city received $600 million. These data have been adjusted for inflation.
Another snapshot of the city’s fiscal situation displays why shared revenue from the state was so important to the city. The city’s revenue composition for fiscal year 2011 was: property taxes (15 percent), intergovernmental aid (35 percent), income tax (13 percent), other taxes (18 percent), charges and fees (15 percent), other nontax revenue (5 percent).
Any reduction in state aid substantially hurts the fiscal health of the city. And this is not charity on the part of the state. Municipalities in the state cannot collect sales tax. Due to this restriction the state shares the revenue from the 6 percent sales tax that it collects. No different than the 30 to 39 percent in federal funds that the state of Michigan receives.
“I appointed emergency manager Kevyn Orr, a nationally respected turnaround expert, to right the city’s finances and create a sustainable fiscal future,” said Snyder later in the column. To call Orr a “turnaround expert” is a lie.
Orr is a bankruptcy lawyer. I knew as soon as he was appointed to run the city that Detroit would enter Chapter 9 bankruptcy, and surely Snyder did too. Before his appointment to Detroit, Orr acted as an attorney for Chrysler LLC when it filed for Chapter 11 bankruptcy in 2011.
“The decision to authorize the city to seek bankruptcy was as difficult as it was ultimately unavoidable,” said Snyder. That much is true.
In 2011, shows data from the Pew Research Center on the States, Detroit spent 14 percent of its outlays on debt service (the payment of interest or principal on debts already incurred). That is more than the 5 percent it spent on community and economic development, more than the 9 percent it spent on public works and transportation, and more than the 11 percent spent on administration. And it is certainly more than the 1 percent spent on parks and recreation.
Expenditures for social services and public health matched debt service at 14 percent. The only expenditure which exceeded debt service was public safety at 46 percent. And that 46 percent was put towards a police force with a 58-minute response time.
The Detroit Free Press editorial’s precise criticism revolved around a provision within the state’s Constitution that says promises to pensioners must be upheld. More specifically, the editorial said Snyder should move to help pay for pensions owed to city retirees that Detroit has fallen short on and may be cut in the bankruptcy process.
Detroit has been seen as its own autarky, or cesspool to some, a perception only enhanced by former Mayor Coleman Young and the polarization he attracted. But the city of Detroit deserves compassion that outsiders, specifically those within the state, should feel.
Detroiters are Americans and for us, they are fellow citizens of the state. As the editorial board noted in their piece, “It’s your state, Governor.” It is our city, and rather than draw schadenfreude or an at-least-it-is-not-my-city attitude, we need to help. And that help will certainly come at a cost.
That cost, however, should not be too much to bear for a state that has ridden upon the former success of the city, the Arsenal of Democracy. Still today Detroit remains the top exporter to both Canada and Mexico. More than half of the state’s economic activity happens in two areas, the metropolitan areas of Grand Rapids and that of Detroit.
If we are to be the “comeback state” as Snyder has said, Detroit has to come back with us.