Taking over Detroit City

The problems of Detroit have been well-documented over recent years – a declining population, high crime and crumbling neighbourhoods. But now, the city is facing its toughest challenge yet.

On Tuesday, city council officials appealed against a move to let the state of Michigan take over Detroit’s finances.

The proposal by Michigan’s Republican Governor Rick Snyder would make Detroit the largest US city ever taken over by its state.    

It would see an appointed “emergency manager” installed, someone with virtually unchecked power to gut union contracts, cut employee health insurance and slash services.

Some councillors also argue it would leave the mainly African-American city without democratically-elected representatives.

Michigan has declared a series of local financial emergencies since 1990. Currently, the cities of Flint, Benton Harbor, Pontiac, Ecorse are all under the supervision of the state.

Also, school districts in Detroit and Highland Park have a state-appointed emergency financial manager.

The state-appointed fund managers have widespread powers to cut city spending, change contracts with labour unions eliminate entire city departments or sell city properties – all without the consent of local officals or residents.

And this is possible because there is no right to local government enshrined in the US constitution.

So how effective have these emergency interventions been elsewhere in Michigan?

The city of Highland Park was first taken over by the state in 2001. But, the first emergency fund manger was sacked after it was discovered that he took unauthoritised payments – he had publicly agreed to a salary of $1. And now it is back in debt and has an emergency fund manager for the city’s schools.

The city of Hamtramck’s finances were under the state’s control form 2000-2007. But in 2010, it went back into the red and was forced to declare bankruptcy.

In 2011, the city of Pontiac got an emergency manager, Lou Schimmel. He has faced criticism for outsourcing police services and privitising major city departments. The city’s public employee workforce has also been cut by 90 percent.

Flint, Michigan also had an emergency manager from 2002-2004. But that did not help much at all. It now has yet another emergency manager in place and it currently faces a budget deficit up to $20m.

So is a state takeover of Detroit’s finances really in its residents’ interests? And do citizens risk being further marginalised by corporate interests?

Inside Story Americas, with presenter Shihab Rattansi, discusses with guests: Darrell Dawsey, a journalist, author and columnist for the Deadline Detroit news website; Bettie Buss, a former supervising budget analyst for the city of Detroit; and Chris Savage of Eclectablog.com – a progressive news and political commentary website.