Expert: Different approach could have helped Detroit avoid bankruptcy filing

[Detroitnerd]

I'm projecting love!

Alright, buddy. C'mere. *hugs*

[erikd]

Not a drop in the bucket at all. I've heard tell from several analysts that Detroit, even with all its inefficiencies, could have forestalled bankruptcy if the state had honored its part of the deal.

Ah, but I see through your sophistry, Hermod. When the facts are against your argument, argue circumstances. [[DETROIT WAS WASTING MONEY!) When the circumstances are against your argument, pose as a firm defender of principle!

The "analysts" who claim that the financial crisis could have been forestalled if the state had honored the revenue sharing agreement with the city don't know what the fuck they are talking about.

The largest source of revenue for the city of Detroit is the city income tax. The deal that Detroit made with the state was conditional. The state agreed to not cut revenue sharing payments to the city IF the city cut its income tax rate from 2.5% and 1.25% down to 2% and 1%.

To be sure, the state, under Governor Granholm, reneged on the deal and revenue sharing payments to Detroit were reduced. As a result of the state not honoring their end of the deal, Detroit did not honor its end of the deal, and city taxes remained at 2.5% and 1.25%

According to a recent Free Press article, the city collected $245 million in city income taxes in 2010. If Detroit had reduced its income tax rates to 2% and 1% as spelled out in the agreement, the city would be losing around $50 million in tax revenue EVERY YEAR.

The argument that the state's failure to honor the agreement has cost the city some $220 million since 2003 simply doesn't hold water. If the state had honored the revenue sharing agreement, the city would have received that $220 million more in revenue sharing, but the city would have sacrificed around $500 million in lost income tax revenue over the same period.

In terms of pure tax revenue collection, Detroit actually benefited from the state reneging on the income tax/revenue sharing deal.

[Wesley Mouch]

...In terms of pure tax revenue collection, Detroit actually benefited from the state reneging on the income tax/revenue sharing deal.

So the obvious question is what really happened here? Was this an engineered collapse then? Both the state and city won with more money to spen elsewhere for other things and only the taxpayers lost by footing the bill. I guess I answered my own question.

Thanks for the facts.

[erikd]

The problem wasn't the State of Michigan didn't want to help. It's that that they didn't want to help unless EVERYTHING was on THEIR terms, versus forming a TRUE partnership.

Either way, his conclusion is right. Because the city, suburbs and state were too petty to put their differences aside for the greater good, now Detroit, the state's largest city, is in bankruptcy court [[unlike Chicago/Illinois, Pittsburgh/Pennsylvania and New York City/New York who were all too busy to hate).

http://www.detroitnews.com/article/2...#ixzz2fdogYg9m

This whole portrayal of the city vs the state is moronic. I have been a taxpaying/voter/resident of Detroit for a long time, and I do not feel disenfranchised in the least bit.

The state is not some kind of foreign invader taking over our city. The state has absolute authority to run its local municipalities as it sees fit. Strong home rule is not a right, it is privilege granted by the state, which can be rescinded at any point. All Michigan residents have representatives in Lansing and are able to vote for the governor. We have the right to vote for our state and federal representatives, but there is no such thing as a right to have a city council or mayor. Local governments are nothing more than creatures of the state, and they can be created, modified, or eliminated by the state, as the state sees fit. This is well established in constitutional law.

Local municipalities do not have the right or authority to dictate terms to the state, so all of the complaining and lawsuits are irrelevant. The state tried to play nice with the city and offer a consent agreement, but our moronic city officials wanted no part of it, so they forced the state's hand.

When our elected city council [[with an 11% approval rating from Detroiters) rejects a no-brainer offer by the state to run Belle Isle [[supported by 66% of Detroiters) then maybe it is time for the state to step in and take care of business.

[Scottathew]

have any of you been at any Clowncill meetings? they don't want HELP. they think that they know how to make the City run. They have been doing the same for years and have only helped themselves. Nothing to see here...Move along... all is good!

Ding.

It's like a doctor talking to a patient saying, "If you want to save your mangled leg, you need to take this medications to stop the infection."

The patient turns to the doctor and says, "There's nothing wrong with my leg, I'm going to go home now. Can you please have someone carry me out to my car?"

[313WX]

The "analysts" who claim that the financial crisis could have been forestalled if the state had honored the revenue sharing agreement with the city don't know what the fuck they are talking about.

The largest source of revenue for the city of Detroit is the city income tax. The deal that Detroit made with the state was conditional. The state agreed to not cut revenue sharing payments to the city IF the city cut its income tax rate from 2.5% and 1.25% down to 2% and 1%.

To be sure, the state, under Governor Granholm, reneged on the deal and revenue sharing payments to Detroit were reduced. As a result of the state not honoring their end of the deal, Detroit did not honor its end of the deal, and city taxes remained at 2.5% and 1.25%

According to a recent Free Press article, the city collected $245 million in city income taxes in 2010. If Detroit had reduced its income tax rates to 2% and 1% as spelled out in the agreement, the city would be losing around $50 million in tax revenue EVERY YEAR.

The argument that the state's failure to honor the agreement has cost the city some $220 million since 2003 simply doesn't hold water. If the state had honored the revenue sharing agreement, the city would have received that $220 million more in revenue sharing, but the city would have sacrificed around $500 million in lost income tax revenue over the same period.

In terms of pure tax revenue collection, Detroit actually benefited from the state reneging on the income tax/revenue sharing deal.

I'm not sure what ass you pulled your calculations from, but the extremely detailed spreadsheet below shows a different story. Also notice, despite the fact that the state reneged on its end of the agreement, Detroit is still bound to lower its income tax rate, thus costing Detroit an additional $8.5 Million in lost revenue for each percentage point the income tax rate is lowered.

http://www.mlive.com/news/index.ssf/...ndshake_d.html

http://bridgemi.com/wp-content/uploa...tion-chart.pdf

http://www.myfoxaustin.com/story/195...ncome-tax-rate

In any event, no one has said that was the ONLY reason for Detroit's financial problems. But this is merely one good example of a long series of missteps [[if not just outright apathy or ill will) by the State of Michigan [[prior to the 11th hour draconian measures in late 2011/early 2012) that helped Detroit reach the position it's in now.

[Scottathew]

But this is merely one good example of a long series of missteps [[if not just outright apathy or ill will) by the State of Michigan [[prior to the 11th hour draconian measures in late 2011/early 2012) that helped Detroit reach the position it's in now.

If the State of Michigan was apathetic, it wouldn't be involved. It would allow Detroit to collapse financially. It would allow payless paydays, it would allow the police and fire force to stop showing up to work as they're no longer payed to do their job. Now THAT would be apathy.

Instead the State of Michigan has offered to help, but if you want the State's money to keep the city running there are going to be strings attached.

Even when the strings are minor, like the Belle Isle deal, Detroit City Council still doesn't want help. Detroit City Council doesn't want to lose control of a precious asset that they don't know how to take care of. If they can't control it, how are they going to mismanage it and run it into the ground?

The problem is that Detroit has its hand out for help, but the city council and Bing [[depending on the day) want to be beggars and choosers.

The City of Detroit is like the street bum that says, "Hey, I'm hungry, can you help me?", and then you offer to give him food and he says that he just wants money.

[Detroitnerd]

The City of Detroit is like the street bum that says, "Hey, I'm hungry, can you help me?", and then you offer to give him food and he says that he just wants money.

Well, that's the prevailing point of view of some of the less engaged people in the suburbs. Although I do see how this sort of mythology would be accepted at face value with no research. It must be very soothing to believe such things, as one would then never have to question the inter-relatedness of all our problems in the metropolitan region. Detroit's a bum. It's quite simple and gives a kind of ideological cover for taking away the political rights of a whole class of people. So, while I'm afraid I don't agree with you, I understand why you absolutely must feel the way you do.

[antongast]

This whole portrayal of the city vs the state is moronic. I have been a taxpaying/voter/resident of Detroit for a long time, and I do not feel disenfranchised in the least bit.

The state is not some kind of foreign invader taking over our city. The state has absolute authority to run its local municipalities as it sees fit. Strong home rule is not a right, it is privilege granted by the state, which can be rescinded at any point. All Michigan residents have representatives in Lansing and are able to vote for the governor. We have the right to vote for our state and federal representatives, but there is no such thing as a right to have a city council or mayor. Local governments are nothing more than creatures of the state, and they can be created, modified, or eliminated by the state, as the state sees fit. This is well established in constitutional law.

Local municipalities do not have the right or authority to dictate terms to the state, so all of the complaining and lawsuits are irrelevant. The state tried to play nice with the city and offer a consent agreement, but our moronic city officials wanted no part of it, so they forced the state's hand.

"I get all that, I just think the laws in this instance are being applied in a manner that furthers race and class disparities."
"But it's all perfectly legal!"
"...but the law is being applied in a manner that furthers race and class disparities."
"But no laws are being broken!"
ad infinitum

[Scottathew]

Detroit's a bum. It's quite simple and gives a kind of ideological cover for taking away the political rights of a whole class of people.

I think you're reading a little too far into my comment\analogy.

My point is Detroit needs and wants help, but City Council rejects any outside influence. They just want the money so that they can continue on with their bad habits and business as usual.

Detroit is broke, and none of the elected officials want to fix it. The little bit that they have done they've been forced to do, and even then its woefully inadequate.

If the state doesn't get involved, Detroit would have gone defunct. If Detroit goes defunct, then police and fire don't get paid. If police and fire don't get paid they're not going to work.

The State's intervention isn't perfect, there are things about it that I don't like. However, the elected officials were and are not willing to do anything about it, held hostage by a vocal minority of people and the pandering that will benefit them come election time.

[Wesley Mouch]

"I get all that, I just think the laws in this instance are being applied in a manner that furthers race and class disparities."
"But it's all perfectly legal!"
"...but the law is being applied in a manner that furthers race and class disparities."
"But no laws are being broken!"
ad infinitum

we have pretty strong protection against racial discrimination. Can you explain how laws are being applied to further race and class disparities? Seems to me the opposite. That the laws are being applied to solve serious problems that are harming citizens -- regardless of class or race.

What are you seeing?

[antongast]

Can you explain how laws are being applied to further race and class disparities?

I certainly can, and in point of fact I have furnished such explanations on this board on approximately fifty-three gazillion separate occasions. If memory serves, approximately twenty-one gazillion of those explanations were directed explicitly at you.

Search the archives, Wesley, search the archives. Be a maker, not a taker.

[Detroitnerd]

I think you're reading a little too far into my comment\analogy.

My point is Detroit needs and wants help, but City Council rejects any outside influence. They just want the money so that they can continue on with their bad habits and business as usual.

I don't really think this is the case. As we've joked on here before, a triumvirate of Hazen Pingree, L. Brooks Patterson and Jesus of Nazareth couldn't have saved Detroit given the forces having their way with it. The money that the state has given Detroit over the years is more like hush money than handout.