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Fri November 18, 2011
Detroit: The reality
Detroit Mayor Dave Bing made his long-anticipated speech this week addressing the city’s financial crisis. Even before that people were speculating as to whether the city would end up needing an emergency manager.
That speculation has increased ever since the mayor spoke, but the fact is this. There really isn’t any doubt. The city is not going to be able to succeed in righting its own finances, not under the Bing plan, anyway.
Actually, it may be practically impossible for any sitting politicians to get Detroit out of the mess it is in. The sacrifices needed are too great, and they are too close to the situation.
When I watched the mayor and then read the transcript, my first thought was, oh my God, it’s Rick Wagoner three years ago. Or Bob Stempel two decades ago. They were both chairmen of General Motors, who during company-threatening times, went to the board and said, please let us fix this ourselves. We can do it, honest. But it was clear they couldn’t.
The GM board fired Stempel and, much later, the President of the United States fired Rick Wagoner, as part of a “cushioned bankruptcy” that enabled the world’s once-biggest corporation to survive. General Motors couldn’t go on as it had.
And neither can Detroit. Somehow, I suspect Dave Bing knows this, even if the City Council doesn’t. The respected accounting firm Ernst & Young says the city will run out of cash by next April, if nothing changes. The plan the mayor proposed might buy a few extra months, but changes nothing significant.
Worse, it isn’t a serious plan at all. One of the odder features includes raising the corporate income tax, which would have the effect of angering business without raising any significant amount of revenue.
The mayor’s plan also counts on having the state pitch in $220 million by restoring revenue sharing cuts.
That’s not going to happen, as he must know, and hints that he may be simply setting up a scapegoat. City Council President Pro Tem Gary Brown called the mayor’s plan “a political speech brimming with a false hope of relief.” That’s sadly true, but it isn’t clear that council can make the tough decisions either.
Governor Snyder signaled as much when he ignored the mayor’s request for funds, and instead suggested Detroit take the first step in the emergency manager process. Here’s what I hope the governor and his best minds are thinking hard about.
They need to be looking for the best possible emergency manager for what will be an almost impossible job. Detroit needs to be turned around, and made into a viable public corporation. That’s going to mean tough medicine for Detroiters. But it also should mean financial help from the state -- just like the federal government gave General Motors to enable it to survive.
Detroit politicians have mismanaged their dwindling resources. But many of the rest of us are guilty too, guilty of using the city, taking from it and then abandoning it. All of us are diminished as long as Detroit is a disgrace. The governor, the mayor, and all of us need to walk very carefully through all this. How this plays out could shape the future of our state for many years to come.