A Government Bailout Saved the Auto Industry, but the City of Detroit Was Left Behind

David Firestone, New York Times, March 4, 2012

Sometime soon, probably by the end of April, the city of Detroit is likely to run out of cash. Its revenues are falling and its expenses are growing. If that happens, paychecks will not be issued, doors of public buses and city agencies could be closed, and streetlights will be shut off in more neighborhoods.

Having lost so much—a quarter-million people in just a decade, its industrial base, its political clout—Detroit is now on the verge of losing control of its ability to make its own decisions. If it does not find a way to quickly stabilize its finances through spending cuts and union concessions, the state may appoint a manager to take over its budget from the mayor and the City Council.

{snip} In Michigan, emergency managers can break union contracts, fire city officials and sell off city assets. That has already begun in four other cities, all of them largely black, that the state has taken over in the last few years. Black officials and union leaders have charged that Gov. Rick Snyder, a Republican elected in 2010, has an ideological and racial agenda, and taking over Detroit, which is 83 percent black, would only magnify the tension.

{snip} But an emergency manager may be inevitable.

{snip}

The city that once teemed with auto plants now has only two, a Chevrolet and a Chrysler factory. Chrysler’s gritty new slogan, “Imported From Detroit,” is a bit painful to local residents who know that the Chrysler 200, featured in an Eminem ad, is made in the suburbs, and the 300 and the Town & Country are made across the river in Ontario.

Chrysler’s gleaming Jefferson North plant on the east side of town does churn out Jeep Cherokees and Dodge Durangos, and President Obama noted in a speech last week that it has been adding new shifts. But it is not enough. Just blocks from the plant is some of America’s worst urban devastation, acre upon acre of vacant land, abandoned houses, burned-out stores. A city that held nearly two million people in the 1950s is now down to 714,000, more than a third of whom live in poverty.

{snip}

{snip} Crime is going up, buses are breaking and left unrepaired, and the exodus continues. Even if City Hall can stave off a takeover with union givebacks, layoffs and pension cuts, it will only be for a short time.

The solution may be in the suburbs that have siphoned off Detroit’s money and jobs and talent for decades. A true emergency manager, as many people here have suggested, would have the power to begin merging the tax base of the city with that of suburban counties in hopes of saving the region. {snip}

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