State to Detroit: Drop consent suit or lose funds...

[townonenorth]

Considering that the EM is the only person that can ask for a bankruptcy in the State of Michigan, I don't find it that much of a stretch. Considering that PA 4 has a real possibility of being put on hold soon, and the idiot law department has filed the lawsuit stopping the consent agreement, what options are left?

Even if the state decided to pay the money owed, that would just bump the crisis down the road a bit. Then it's all back to square one again, with the same result. That's not even considering the fact that the Legislature is about to gut the personal property tax paid by businesses. There's another huge loss for the City as well.

[coracle]

It would be very interesting if an EM actually would ask for a bankruptcy judge to intervene. Since it seems as if the state doesn't want Detroit to go into bankruptcy, I assume that they wouldn't appoint someone inclined in that direction, but people don't always do what you would expect.

I don't think the State will impose an EM on Detroit or move it into bankruptcy because they fear someone might burn the City down and/or there might be rioting; then it would turn into a worse mess. So eventually the State will resort to the easy way out and give money in some benign way stretching into the future; which is what Detroit is angling for and the only workable solution.

[townonenorth]

I don't think the State will impose an EM on Detroit or move it into bankruptcy because they fear someone might burn the City down and/or there might be rioting; then it would turn into a worse mess. So eventually the State will resort to the easy way out and give money in some benign way stretching into the future; which is what Detroit is angling for and the only workable solution.

So let me get this straight. They won't appoint an EM because of potential rioting? Bankruptcy will cause a riot? May as well just get it over then, because the state doesn't have that kind of cash to prop up Detroit.

Every other municipality in the state has suffered losses proportionate to Detroit's, in revenue sharing. Detroit is not unique in that respect. Many other cities surrounding Detroit have dropped in property assessments as well, causing fiscal problems.

[313WX]

I don't think the State will impose an EM on Detroit or move it into bankruptcy because they fear someone might burn the City down and/or there might be rioting; then it would turn into a worse mess. So eventually the State will resort to the easy way out and give money in some benign way stretching into the future; which is what Detroit is angling for and the only workable solution.

Or, we simply revert back to the old law, where the eFM will only deal with the financial side of things.

But you're right, efm nor bankruptcy is going to happen [[L. Brooks Patterson and Mark Hackel would both light the torches and burn down the city themselves before bankruptcy hapepns). Nothing's stopping Snyder fom doing either if he's truly only concerned about the city's finances and nothing else. No one forced him to extend the olive branch we call the consent agreement either, he chose to do that.

[iheartthed]

I don't think the State will impose an EM on Detroit or move it into bankruptcy because they fear someone might burn the City down and/or there might be rioting; then it would turn into a worse mess. So eventually the State will resort to the easy way out and give money in some benign way stretching into the future; which is what Detroit is angling for and the only workable solution.

If the state doesn't pony up the money then Detroit's creditors will force it into bankruptcy. The state can't trump federal law and deny the city from going bankrupt unless it is willing to put up the money to prevent it.

[Meddle]

fear someone might burn the City down

Hey, less buildings to demolish = money saved.


Does anybody see the irony of a city running out of money spending money on legal fees?

[John]

Get out the popcorn and pink lemonade as no one knows where this circus will go. Only residents, employees and retirees will suffer.

The damage will spread much further than the residents, employees and retirees. There will be plenty of pain to go around, including but not limited to Oakland and Macomb counties.

[corktownyuppie]

The damage will spread much further than the residents, employees and retirees. There will be plenty of pain to go around, including but not limited to Oakland and Macomb counties.

This is going to go right to the brink of chaos, because the political price of doing what's necessary is essentially political suicide for anyone and everyone involved, state, city, suburbs, etc.

But that's ok, because at some point in the very near future, the balloon will pop. As soon as political suicide starts to look as good or equal to the the other options, you'll see it happen.

My bet is that before resolution, we will see the city pay some of its bills with IOUs, a la California. I think it will truly take bringing this to the point of payless paydays before anything happens.

One big problem in all of this is that there are still many in the city who thinks this is all one big political bluff from the state.

It's not. We can argue over whether insolvency is 7 days away or 7 months away. It won't matter. The trains is coming, like it or not.

[Wheels]

The city Clowncil considered this a contempt agreement right from the start. It is no surprise they are going to go down hard and take as many casualties as possible.

[Wesley Mouch]

The city Clowncil considered this a contempt agreement right from the start. It is no surprise they are going to go down hard and take as many casualties as possible.

Which is proof that this is a pointless excercise -- unless we restructure how we run our municipal governments. The current model doesn't work.

All the EM's of the world can do is tinker around the fringes.

And when she's gone, then it'll all fall back -- and disenfranchised Detroiters will have missed their change to rid themselves of one of their biggest problems. Their own municipal government.

[Mikeg]

Detroit: The Moral of the Story
By Kevin D. Williamson
June 8, 2012

The Left’s answer to the deficit: raise taxes to protect spending. The Left’s answer to the weak economy: raise taxes to enable new spending. The Left’s answer to the looming sovereign-debt crisis: raise taxes to pay off old spending. For the Left, every deficit is a revenue-side problem, not a spending-side problem, and the solution to every economic problem is more spending, necessitating more taxes. The problem with that way of looking at things is called Detroit, which looks to be running out of money in about one week. Detroit is what liberalism’s end-game looks like.

And Detroit does in fact have a revenue problem......
Detroit, once the wealthiest city in the United States by per capita income, is today the second-poorest major U.S. city.

Detroit is evidence for the fact that the economic limitations on tax increases sometimes kick in before the political limitations do......

But Detroit was not reduced to its present wretched circumstances by historical inevitabilities or the impersonal tides of economics. It did not have to end this way, but it did, and understanding why it did is essential if we are to avoid repeating Detroit’s municipal tragedy on a national scale.

One lesson to learn from Detroit is that investing unions with coercive powers does not ensure future private-sector employment or the preservation of private-sector wages......

The second important lesson to be learned from Detroit is that there are hard limits on real tax increases, a fact that will be of more immediate significance in the national debate as our deficit and debt problems reach crisis stage...... The benefits of being in Detroit used to be worth the costs, but in recent decades millions of people and thousands of enterprises large and small have decided that is no longer the case....... No one with eyes in his head could honestly think that the services provided by the city of Detroit and the state of Michigan are worth the costs.

The third lesson is moral. Detroit’s institutions have long been marked by corruption, venality, and self-serving. Healthy societies have high levels of trust. Who trusts Detroit?......

The city fathers of Detroit inherited one of the richest and most productive cities in the world, and they ruined it in a generation......


[click here to read the entire opinion piece]

[Wesley Mouch]

...Does anybody see the irony of a city running out of money spending money on legal fees?

You bet. But I'm not at all surprised. Detroit's leaders are more interested in power than progress.

[Wesley Mouch]

Detroit: The Moral of the Story
By Kevin D. Williamson
June 8, 2012

The Left’s answer to the deficit: raise taxes to protect spending. The Left’s answer to the weak economy: raise taxes to enable new spending. The Left’s answer to the looming sovereign-debt crisis: raise taxes to pay off old spending. For the Left, every deficit is a revenue-side problem, not a spending-side problem, and the solution to every economic problem is more spending, necessitating more taxes. The problem with that way of looking at things is called Detroit, which looks to be running out of money in about one week. Detroit is what liberalism’s end-game looks like....snip...
The city fathers of Detroit inherited one of the richest and most productive cities in the world, and they ruined it in a generation......

[click here to read the entire opinion piece]

This is a great viewpoint that summarizes much of what the urban progressives [[aka conservatives) think about the urban conservatives [[aka liberals) and their ineffective policies.

Everyone should real this.

If you promise to read it, I'll read your article with an opposing view.

[Novine]

"This is a great viewpoint that summarizes much of what the urban progressives [[aka conservatives) think about the urban conservatives [[aka liberals) and their ineffective policies."

Actually, there's very little policy discussion in the article. The key points are that Detroit would have been saved by less unions, less taxes and less corruption. But it doesn't even say that. He doesn't even say what would have saved Detroit. It's hard to take seriously any article that doesn't address the costs of sprawl or racism on the decline of Detroit over the past 60 years. Detroit's population peaked in the 1950s, long before the ascent of the public sector unions or the current levels of taxes. Albert Cobo was a Republican which means the decline of Detroit started under Republican rule, not Democrats. But let's not let the facts get in the way of a good narrative based on politics.

[Brittz]

"This is a great viewpoint that summarizes much of what the urban progressives [[aka conservatives) think about the urban conservatives [[aka liberals) and their ineffective policies."

Actually, there's very little policy discussion in the article. The key points are that Detroit would have been saved by less unions, less taxes and less corruption. But it doesn't even say that. He doesn't even say what would have saved Detroit. Any article that doesn't address the costs of sprawl or racism on the decline of Detroit over the past 60 years. Detroit's population peaked in the 1950s, long before the ascent of the public sector unions or the current levels of taxes. Albert Cobo was a Republican which means the decline of Detroit started under Republican rule, not Democrats. But let's not let the facts get in the way of a good narrative based on politics.

Well said Novine. That article sounds like left bashing from the right with no solutions.

[mwilbert]

As soon as I saw

The city fathers of Detroit inherited one of the richest and most productive cities in the world, and they ruined it in a generation......

I knew it was going to be nonsense, as the decline has been going on at least 3 generations, as people generally reckon generations. There was no generation that inherited a really rich city and left a ruined one.

None of this is to defend the utterly incompetent management of the city over my entire lifetime, but 20th century Detroit was always an undereducated, racially polarized industrial city of the kind that declined after WW2. The decline could and should have been managed much better than it was; many stupid and sometimes corrupt decisions were made, but the idea that Detroit was laid low by a liberal philosophy is ahistorical. And if you think about it, I rather doubt you can say that the taxation and spending and public unionization in Detroit is much higher than that of New York or San Francisco or Boston, but those cities have somehow avoided ruin. The difference lies elsewhere.

[Occurrence]

The city of Detroit can't manage their money. The state shouldn't give the city another dime.

[Tig3rzhark]

You really have to wonder whether this action is being done deliberately in order to force a EM on the people of Detroit. I can't imagine why someone would want that, but if it's Joann pulling the strings, perhaps she wants to forment some sort of protest. You know, revolutionary stuff, just like the old days.

I would probably have to agree.

Maybe we do need a third party to come in to put an end to the war between Detroit and the rest of the State.

If Detroit, files for Federal Bankruptcy, both the city and state will be forced to cooperate fully, for once.

This city VS everyone else war, has to end. And it seems no matter who wins in this war, both sides get screwed.

[313WX]

I would probably have to agree.

Maybe we do need a third party to come in to put an end to the war between Detroit and the rest of the State.

If Detroit, files for Federal Bankruptcy, both the city and state will be forced to cooperate fully, for once.

This city VS everyone else war, has to end. And it seems no matter who wins in this war, both sides get screwed.

I completely agree.

Just put an end to all of the tit-for-tat. everyone involved loses and accepts their share of the reponsibility. The problem is then solved and no one can blame anyone for anything.

[corktownyuppie]

I completely agree.

Just put an end to all of the tit-for-tat. everyone involved loses and accepts their share of the reponsibility. The problem is then solved and no one can blame anyone for anything.

Yep, I'm shifting on this, too. I don't think that bankruptcy is going to give us the fastest results from a policy and execution standpoint...but it's becoming evident that the political moves taking place are motivated more by an unwillingness to be blamed rather than a vision for change and the necessary steps to get there.

For example, I don't necessarily think that the proposals put forth by the consulting group in Troy is perfect. But it's very telling that politicians are spending more time arguing about who stays in power rather than discussing that proposal and the many others to determine what will work.

I don't think that Bing is a bad leader, but I think he misjudged how dysfunctional and toxic the politics really is. Frankly, so did I.

[Wesley Mouch]

Yep, I'm shifting on this, too. I don't think that bankruptcy is going to give us the fastest results from a policy and execution standpoint...but it's becoming evident that the political moves taking place are motivated more by an unwillingness to be blamed rather than a vision for change and the necessary steps to get there.

For example, I don't necessarily think that the proposals put forth by the consulting group in Troy is perfect. But it's very telling that politicians are spending more time arguing about who stays in power rather than discussing that proposal and the many others to determine what will work.

I don't think that Bing is a bad leader, but I think he misjudged how dysfunctional and toxic the politics really is. Frankly, so did I.

Politics is toxic. Business is toxic.

Business behaves badly when unchecked. Politicians behave badly when unchecked.

The difference?

Businesses stay in power by making money.

Politicians stay in power by getting votes.

Thus,

Businesses mostly spend their energy making money.

Politicans mostly spend their energy getting votes.

Now you ask, what's my point?

The only way to get politicians [[and the machines they run) under control is to limit their influence.

Cities should be run by professionals -- like city managers -- with oversight by little actual day-to-day control. This is what happens in publicly traded companies.

Cities should be reduced in scope to only critical functions. Police, fire, health, clerk's office, basic licensing.

There'd still be political fights about those issues -- but not about 'redevelopment' money and its absurd cousins.

[Meddle]

Cities should be run by professionals -- like city managers -- with oversight by little actual day-to-day control. This is what happens in publicly traded companies.

Hmmmm, what IF people could buy 'shares' of Detroit and look towards dividends? Have annual shareholder meetings where proposals and programs and salaries would be voted on.

[townonenorth]

Politics is toxic. Business is toxic.

Business behaves badly when unchecked. Politicians behave badly when unchecked.

The difference?

Businesses stay in power by making money.

Politicians stay in power by getting votes.

Thus,

Businesses mostly spend their energy making money.

Politicans mostly spend their energy getting votes.

Now you ask, what's my point?

The only way to get politicians [[and the machines they run) under control is to limit their influence.

Cities should be run by professionals -- like city managers -- with oversight by little actual day-to-day control. This is what happens in publicly traded companies.

Cities should be reduced in scope to only critical functions. Police, fire, health, clerk's office, basic licensing.

There'd still be political fights about those issues -- but not about 'redevelopment' money and its absurd cousins.

Police, fire, are definitely basic services. Although an increasing of the use of non-uniformed employees doing desk jobs is a must. And a reformation of the pension structure away from the defined benefit.

Health could be run by the County, or private entities like DMC or St. John's.

The clerk's office is a real holdover from the 19th century. Real reforms should start there, as well as in other cities. The great seal? Please. Electronically sign all documents, and make the collation and creation of Council packages in electronic format. Make the county clerk responsible for voting, and go to a mail only ballot. You register, you get one deliered.

[townonenorth]

Politics is toxic. Business is toxic.

Business behaves badly when unchecked. Politicians behave badly when unchecked.

The difference?

Businesses stay in power by making money.

Politicians stay in power by getting votes.

Thus,

Businesses mostly spend their energy making money.

Politicans mostly spend their energy getting votes.

Now you ask, what's my point?

The only way to get politicians [[and the machines they run) under control is to limit their influence.

Cities should be run by professionals -- like city managers -- with oversight by little actual day-to-day control. This is what happens in publicly traded companies.

Cities should be reduced in scope to only critical functions. Police, fire, health, clerk's office, basic licensing.

There'd still be political fights about those issues -- but not about 'redevelopment' money and its absurd cousins.

Police, fire, are definitely basic services. Although an increasing of the use of non-uniformed employees doing desk jobs is a must. And a reformation of the pension structure away from the defined benefit.

Health could be run by the County, or private entities like DMC or St. John's.

The clerk's office is a real holdover from the 19th century. Real reforms should start there, as well as in other cities. Make the county clerk responsible for all elections, and use mail-only ballots as in Washington state.

The clerk's office can also forget about the great seal, what about electronically signing all documents and making the COD [[and others) a paperless office?

[corktownyuppie]

Hmmmm, what IF people could buy 'shares' of Detroit and look towards dividends? Have annual shareholder meetings where proposals and programs and salaries would be voted on.

Unsure if you're joking or asking or maybe some combination of both

But to answer the question...IF people could buy shares of Detroit, here's what would happen. The people who are owed money by the city...which include not just the banks but also pension holders present and future... would receive a reduced pension payment with the balance due made up with Detroit shares.

For example, if my pension is $2000/mo., I'd probably get $1,000 a month in cash and another $1,000/mo. in shares. Obviously, those share entitle me not just to future dividends, but also with the power to vote who is running this city.

Obviously, the people running the city have to balance their ability to payout dividends with the need to satisfy and grow the customer-base, taxpaying citizens of the city.

If the people running the city focus only on paying dividends out, then people will leave the city, which will eventually destroy the value of the shares. But if the city focuses only on taking care of its citizens, then you'll eventually run out of money [[rendering the shares worthless).

Interesting thought.