Between 2000 and 2010, the number of vacant houses in Detroit increased by 106.1 percent. In that same time, the population dropped by 25 percent. Some believe it’s a city plagued with racial tension and a bad reputation, though some struggling businesses are now profiting.
Now, Michigan Governor Rick Snyder, who delivered last year’s commencement address, has appointed Keyvn Orr as an emergency financial manager (EFM). After taking control on March 25, Orr plans to cut city services and is considering having the city claim bankruptcy in federal court. With debts as high as $14 billion, it would be the largest municipal bankruptcy case ever.
“These concepts are not rare or unusual concepts,” Orr stated. “They’ve happened in other circumstances. The city is cash-strapped. It’s a crisis. The crisis is severe. So I think you have to look at everything, even with the emotional overlay.”
Even though a bankruptcy could be completed in several months, Orr would have to reach deals with creditors in order to settle city debts. Many services may be completely de-funded or privatized. Carrie Booth Walling, associate professor of political science, believes that Detroit needs help from the state.
“There is no way for Detroit to solve its financial problems by itself,” Booth Walling said. “With the current laws that are in place, the emergency financial manager will be able to impose cuts and changes that local and elected officials do not have the legal power to do.”
Though she thinks that the city needs help from the state, Booth Walling thinks there are other policy choices that can be made rather than appointing an EFM.
“The state has a responsibility to all of its citizens to ensure that they receive adequate services regardless of where they live, but the role of state government should be to assist and not to take over,” Booth Walling said. “The state should be undertaking policies which strengthen local governing capacity, not diminishing it. In Michigan, municipal governments only have the power that the state grants them.”
Michigan.gov indicates that Detroit may have been on a path to financial ruin for decades. The state government shows the city has been borrowing funds to pay off its debt, spent more than it took in and its expenditures have outpaced revenues.
“My personal opinion is that if a local government has failed to serve its citizens on a budget, then it loses the right to run its own finances,” said Salaina Catalino, Rochester Hills junior and College Democrats president. “If an emergency financial manager is the only way to help the community in question, then I don’t see the problem in assigning one.”
Detroit’s elected leadership is comprised entirely of Democrats. Meanwhile, an Emergency Financial Manager has been imposed on the city by a Republican state governor.
“There are inherent risks for the state in taking over Detroit and the political divide exacerbates those risks,” Booth Walling said. “In the end, it is the fairness and success of the process that matters.”
Booth Walling has been teaching at the college for two years. Her husband, Dayne Walling, is the mayor of Flint. That city has also been under control of an EFM since August of 2012.
“There are some who argue that an EFM takes the politics out, but in his experience the EFM has made the process of governing even more political and bureaucratic,” Booth Walling said.
Flint isn’t the only city. Allen Park, Royal Oak Township, Hamtramck, Highland Park, The Village of Three Oaks, Pontiac, Ecorse, Benton Harbor, Detroit Public Schools, Highland Park Schools and Muskegon Heights Schools have all been controlled by EFMs.
“The economy and society of the city have not been improved by the EFM who is working to balance the books but without addressing underlying economic fundamentals,” Booth Walling said. “In fact, it is possible that the unfairness of the process has weakened the community further by making it less competitive in the metro region for attracting families and businesses.”
Actually, during November’s elections, 70 percent of Flint residents opposed Public Act Four.
“The bypassing of local election results by imposing a manager appointed by the state who is not required to involve city residents in the decision-making process is considered an egregious assault on democracy by a clear majority of Flint residents,” Booth Walling said.
Some Detroit residents, like Flint residents, believe a state appointment of an EFM challenges their voting rights, too. In a recent Detroit Free Press article, the city’s EFM remarked on that concern.
“People have a right to peacefully assemble,” Orr stated. “They have a right to freedom of expression as long as it’s civil. But any notion that somehow it’s a deprivation of voting rights is just inaccurate. It’s not true.”
Photo courtesy of Shawn Wilson, Wikimedia Commons