Detroit Faces a State Takeover

Detroit's largest employer is the city. The second largest employer is the school corporation. One in 63 Detroit citizens works in the public sector as opposed to Indianapolis which is about double ratio at 122 to 1. The massive public payroll and the crushing retirement benefits have put Detroit in a position that Michigan may soon be forced to seize control of the city's finances. There is recent precedent for such action. Earlier this year Pennsylvania took control of a failing Harrisburg but Harrisburg doesn't suffer the civic failings as does Detroit. Harrisburg got in trouble when in the 70's it invested in a municipal incinerator that never worked properly and eventually borrowed $315 million against it. On October 20 of this year Gov. Tom Corbett has signed a new law giving him unprecedented power to force Pennsylvania's capital into a state-sanctioned financial.

Compared to Detroit, Harrisburg is a walk in the park. It has an upscale infrastructure, functioning public schools, and a more or less trustworthy city administration. Detroit is more like Tripoli than Harrisburg. The city administration is both corrupt and dysfunctional. The city's police and fire departments have had scandals or rather have an ongoing scandal that has lasted for generations. The medium price of a single family home has declined to $7,500 and property tax make up just 14% of the city revenue. If that's not bad enough, the citizens of Detroit celebrate Halloween by torching houses. Yeah, good clean fun.

Governor Rick Snyder's administration said it would begin a review of Detroit's precarious finances. If the governor concludes that the city's economic situation constitutes an emergency, he could dispatch a manager who could push the mayor and city council to the sidelines. The city's leaders are understandably upset at the prospect of Snyder's appointing a city manage who could fire them, sell off public property, privatize patronage jobs at the city owned bus company, municipal trash collection, city owned parking lots, and even Belle Isle, Detroit's popular island park. The manager could also break all union contract. When Michigan took control of Benton Harbor the city manager, Joe Harris ordered firefighter cross-training for police officers, which reduced public-safety costs by a third. He also negotiated new collective-bargaining agreements with many unions, forcing Benton Harbor employees to pay 20 percent of their health care premiums and contribute 10 percent of their wages to pensions. In Pontiac the city manager dismissed the city clerk, the city attorney and the head of public works.

Under a Gingrich, Perry or Bachmann administration legislation that would force some public work from welfare recipients would probably pass and be signed into law giving the participants a vested interest in city's well being. Michelle Obama would probably like to relocate welfare recipients to collective farms in the northern counties where they could grow organic lettuce. This is a legitimate state issue and Snyder can probably pull it off without any help from Washington.