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Detroit’s fragile future

Feb 24, 2016

Seven years ago, our biggest concern in Michigan was the domestic auto industry. The question was, could it possibly survive? Three years ago, our worries centered on Detroit which was about to plunge into emergency management and bankruptcy.

These days the Detroit Three are no longer the Big Three, but they are thriving and making billions. Detroit is out of bankruptcy and is perceived as dramatically improving.

As a result, it too has been pushed to the periphery of our vision, which is otherwise fully consumed by the crisis that is Flint, and the growing stunned realization that Donald Trump is increasingly likely to be the Republican nominee for president.

Last night Detroit Mayor Mike Duggan took to the airwaves to deliver his annual State of the City address. Much of what he said was deservedly self-congratulatory. The number of people fleeing the city has slowed. Homicides are down, and demolitions are way up.

The city still needs jobs and money. But there’s another looming problem on the horizon – a huge, nearly half-billion dollar pension shortfall the city needs to begin paying off eight years from now. Give Mike Duggan credit: Previous mayors might have swept that under the rug. After all, he probably won’t be there in eight years.

But instead, he is forcing Detroit to confront that now which is the responsible thing to do. The problem is compounded by apparent errors made by the grotesquely overpaid “consultants” who advised the city and its emergency manager though the bankruptcy process.

Turns out they used the wrong tables to make their calculations, and the city needs to pay $83 million more in 2024 alone than originally thought. Duggan is thinking about suing them.

But in the meantime, he is behaving the way responsible officials should do but seldom do. He is budgeting as if the city will be liable for that money, setting some aside, trying to reduce or eliminate the impact on city services.

The bottom line, however, is that the city needs more dough. The best way to accomplish that, everyone agrees, is to attract more jobs and people.

There are two things the legislature needs to do, and the first won’t cost the state a thing. People who, like me, live elsewhere but work in Detroit, pay a non-resident income tax. Too many private employers in the city don’t withhold these very legitimate taxes.

The legislature needs to pass bills that would require withholding for any Michigan cities that have municipal taxes. Perhaps even more important, Lansing needs to come up with a fix for Detroit’s public schools, which otherwise will run out of money in April.

The governor has proposed a good plan to allow the schools to start fresh and eliminate a crippling, half-billion dollar debt. This will cost taxpayers, but not nearly as much as bankruptcy would. But it is being held up in the lower House by ideological fanatics who are insisting on destroying the teachers’ union as a price for rescuing the schools.

Detroit’s “recovery” is still fragile – and depends on its eventual ability to attract new residents and families, and you can’t do that without good schools. How this all plays out is vitally important for all of us. When it comes to Detroit, the whole state should be watching.

Jack Lessenberry is Michigan Radio's political analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.