Flint Manager Warns of Bankruptcy over Retiree Costs

Crain's Detroit, July 17, 2014

Flint may be Michigan’s second city to plunge into bankruptcy unless retirees accept cuts in health benefits that threaten to unravel a balanced budget, Emergency Manager Darnell Earley said.

“If Flint were to go to bankruptcy, that would highlight that this legacy-cost problem has to be addressed more globally,” said Eric Scorsone, a Michigan State University economist. “Flint’s at the forefront, but a lot of cities are on the same train, and that train is headed for the cliff.”

The specter intensifies the conflict over finances in the city of 100,000, which twice has been under state control. Like Detroit, which a year ago this week filed the largest U.S. municipal bankruptcy, Flint has struggled with loss of population, jobs and revenue. The birthplace of General Motors Co. has only half its population of 1960.

“If we have no ability to mitigate the cost of retiree health care, that’s going to make it very difficult for the city to remain financially stable over the next few years,” Earley said in an interview at City Hall. Without changes, retiree pension and health expenses would consume 32 percent of the $55 million general fund.

As Detroit draws worldwide attention for its record $18 billion bankruptcy, Flint demonstrates the plight of U.S. cities where unfunded post-retirement costs rival or exceed pension liabilities. In Michigan alone in 2011, municipalities had nearly $13 billion in health-care liabilities for retirees, compared with about $3 billion for pensions. Flint is among 17 cities and school districts under some form of state control.

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More than 80,000 Flint-area residents were employed by GM in 1978. Now, that number is about 7,500, according to a 2011 report by Michigan State University. In the past two years, the municipal workforce has been cut 20 percent and employees have taken a 20 percent pay cut.

A federal judge gave city officials a reprieve June 30 when he allowed changes in retiree health coverage that he had stopped in March 2013. While no trial date has been set for the lawsuit challenging the cuts, U.S District Judge Arthur Tarnow in Detroit said that without relief, Flint may have to cut public safety and can’t issue bonds to cover the cost because it has no credit rating.

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The battle over Flint’s finances drags on as its downtown shows signs of revival with restaurants and businesses lining its red-brick main street, anchored by the University of Michigan-Flint campus.

“This is one bright star out of a lot of negatives,” said police Officer Tom Snyder, who patrols the district alone weekdays on a three-wheeled standup vehicle. Two officers are stationed downtown during evenings.

Yet there’s talk of eliminating the police presence to cut costs, a bad idea for the hub of the economic revival, Snyder said.

“It’s very important to support that,” he said.

Without retiree health-care changes, the police force was to be trimmed by 36 officers to 115, and the fire department cut by 19 positions, to 75, under the city’s two-year budget. Those reductions would occur despite a five-year tax increase for public safety that voters approved in 2012.

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Blaming retirees is unfair, said U.S. Rep. Dan Kildee, a Flint-area Democrat who founded the Center for Community Progress, a Washington, D.C.-based advocate for urban revitalization. More culpable, he said, are shrinking local revenue and the state’s cumulative $54.9 million reduction in aid to the city since 2003, according to the Michigan Municipal League.

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  • JackKrak

    Just like in Detroit, blacks only get concerned about the cost of things when it finally reaches absolute crisis point and their ability to spend money is threatened not in some abstract future time, but tomorrow.

    It’s the same mentality that allows them to never pay a water bill because because – hey, look! – the water is still coming out of the tap. Cut the water off & suddenly it’s a “crisis”.

  • E_Pluribus_Pluribus

    2010 Census: The racial makeup of the city was 37.4% White, 56.6% African American…

  • dd121

    Politicians don’t seem able to deal with problems until it becomes a crisis. Seems to be a systemic problem of representative government. Those politicians of 30 years ago who made the promises are long gone. The chickens, who are forming at the door, are home to roost.

    • ejXinMI

      A systemic problem of representative government when it also has these features: 1) non-contributors are allowed to vote; 2) the uneducated, and ill-informed are allowed to vote; 3) folks from #1 and #2 are allowed to hold office.

      • dd121

        Yep, Jefferson and others warned of all of these weaknesses. This form of government usually doesn’t last more than about 250 years. We might be on borrowed time.

      • IstvanIN

        It is called universal suffrage. You can not give the vote to people who have no stake in the success of the country/state/municipality.

        • Why not?

          • Wholly Unconvinced

            I’m not sure if your question was sarcasm or not… but if it wasn’t, the obvious answer is because those who have no stake, have no reason to vote in the interests of the county/state/municipality.

            They will naturally, given the opportunity, vote for themselves, ie: “free stuff” and the representatives who promise more “free stuff”.

            I really feel silly answering this question … you were being sarcastic, right?

          • Of course, but I wanted someone else to explain it in their own words. This way, they really understand, and they will remember.

          • Wholly Unconvinced

            *Phew* … you really had me questioning my sanity for a moment there. You’re one of the posters here who seems to have a generally well grounded view of life, the universe, and everything, so I was utterly confused by your rather “out there” question.

    • Petronius

      Are Americans still capable of self-government? The evidence would seem to run against it.

      Democracy is the most idealistic of all forms of government because it requires the greatest possible extension of civic virtue to all citizens.

      This includes an expectation of schooling in citizenship, a sense of mutual responsibility for the fate of fellow citizens, a willingness to work for the common good, a profound and universal respect for the Constitution, the rule of law, and private property, a free and honest press, and active support for the republic through participation in community affairs, military service, and payment of taxes. It is predicated on the idea that its citizens will be faithful and obedient in religion, will be bound by their oaths, will develop strong families, will be industrious in their labor, and will possess an overriding sense of loyalty, moderation, fairness, justice, and prudence.

      Sadly these conditions no longer apply in modern America.

      • dd121

        And that’s why this ship of state is starting to slip beneath the waves. It’s a big ship and it may take a while.

    • propagandaoftruth

      This is just how things get a little crappier with each rising tick of black/brown Islamic society percentage of a society.

    • Xerxes22

      When those promises were made, the city was probably majority White with a healthy tax base. As the city deteriorated and the Whites fled, the politicians either “borrowed” from the pension fund and used the money for other purposes or just didn’t make the required payments. This is why so many cities and states have this problem.

  • Bon, From the Land of Babble

    In the mid-2000s, Flint became known for its high crime rates. Since this time, Flint has been continually ranked among the ‘Most Dangerous Cities in the United States,’ with a per capita violent crime rate seven times higher than the national average.

    Despite being bankrupt, the NAACP is correct: residents of Flint should get their water for free.

    Make the White-owned corporations in Flint pay up to bail out Flint.

    Either that or call Michael Moore.

    Maybe he can sell one of his mansions to pay off one of these cities’ debts:

    General-Purpose Local Government Bankruptcy Filings (as of Dec. 2013):

    — City of Detroit

    — City of San Bernardino, Calif.

    — Town of Mammoth Lakes, Calf. (Dismissed)

    — City of Stockton, Calif.

    — Jefferson County, Ala.

    — City of Harrisburg, Pa. (Dismissed)

    — City of Central Falls, R.I.

    — Boise County, Idaho (Dismissed)

    map of bankrupt cities, here:

    http //www governing com/gov-data/municipal-cities-counties-bankruptcies-and-defaults html

    • Wholly Unconvinced

      Wow, Harrisburg? I’m not at all surprised, as I’m familiar with the place, and it’s denizens, but didn’t realize it had gotten THAT bad.

  • connorhus

    What’s funny is when a majority Black municipality goes bankrupt, like the one down in Georgia was it? If the majority of the Pensioners are White they have no problem cutting those pensions but in cases like Detroit.. well… They want all the White people on the hook for them.

    • Nonhumans

      I don’t think the term you’re looking for is funny, I believe it is deplorable, and a deplorable double standard at that. Whites have treated nonhumans a lot better than they have ever deserved, especially in the last 50 years or so.
      .
      What have we gained from our pathological altruism? The knock-out game, rampant black on white crimes of all varieties (excepting in large part white-collar bc they are intellectually inept), the rise of a “Gangsta” and welfare culture, ruination of nearly every inner-city/urban area, frivolous discrimination lawsuits, etc
      .
      In short, they are insufferable and incompatible with the first-world. Everytime I hear a nonhuman going on about how raaayciss us whites are, I invite them to return to Africa, far far away from us oppressive humans and see how they fare. They know better. Their lives are measures better bc of us, and only bc of us.

  • IstvanIN

    Flint used to be the home of Buick and the Buick City plant. Of course, without a major employer like that to pay taxes, and to employ people who pay taxes, receipts go down hill fast. Then there is the problem of an increasing black population. Black just don’t NOT pay taxes, they are net tax consumers, and not just in welfare payments. Blacks require additional public services, such as police, firemen, EMTs, school security guards, school study team experts, prison guards, social workers, etc. so the cost of government sky rockets. Then down the road those additional government workers need pensions. And on it goes. I am sure someone could put this more eloquently than me but the fact remains that blacks drive out tax payers, increase government costs, and are generally a loose/loose situation for any society.

    • Ngati Pakeha

      No my friend others couldn’t put it more eloquently. It is what it is. Net tax consumers as you say. A lot of them rely on some sort of hand out from the cradle right up until the grave. You could even argue the are still a societal detriment post mortem as I’m damn sure they don’t pay funeral costs.

    • Blacks also demand faux, make-work government jobs as part of their “gibs me dat” package. Paying a bunch of mental midgets to play “dress-up” and gossip in a government office five days a week would be expensive even if taxpayers weren’t being asked to support these freeloaders after they retire from playing “dress-up” and gossiping.

      The future of Flint is Detroit. If bankrupt cities like Detroit were serious about saving money, they would eliminate anyone with the word “diversity” in their job description from the municipal payroll.

    • Mark Hillyard

      There is always hope in the midst of all this carnage raging in our cities. The invasion is, I believe, an attempt at removing us from power and as a free country. I doubt anyone can make a good counter argument without lying. However…”When the Assyrian comes into our land
      and treads in our palaces,
      then we will raise against him seven shepherds
      and eight princes of men;
      6they shall shepherd the land of Assyria with the sword,
      and the land of Nimrod at its entrances;
      and he shall deliver us from the Assyrian
      when he comes into our land
      and treads within our border.” Micah 5

      Assyrian can be replaced with enemy, Babylon and all other confusion being brought into this country.

      Jesus said, “From the days of John the Baptist until now, the kingdom of heaven has been subjected to violence, and violent people have been raiding it.” Mat 11.

      However the violent will not win because Jesus also told us that we “who are called by my name”, ie, Christian, will receive the Kingdom here on Earth. 29 “And I appoint unto you a kingdom, as my Father hath appointed unto me; 30That ye may eat and drink at my table in my kingdom, and sit on thrones judging the twelve tribes of Israel.” Luke 22 and many other witnesses to this promise… ““Fear not, little flock, for it is your Father’s good pleasure to give you the kingdom.”

      • As He made sheep for flocks, He surely also made wolverines, which not even bears will mess with.

  • Paleoconn

    Michael Moore should move there. His eating budget alone should revive the restaurant industry.

  • Puggg

    News today is Flint’s favorite son owns nine houses.