It's really pretty simple actually.

SMART's budget is heavily dependent on the sort-of-regional transit millage, paid for by many communities in Wayne County [[but not Detroit, Livonia and some others), many communities in Oakland County, and every community in Macomb County.

The millage is dependent on property values, so when property values crashed, SMART's income took a major dive. SMART raised fares to partly compenate, but the millage revenue just kept going down.

So SMART was in a position where it would have to cut its total bus operating hours per week by somewhat over 20%.

Now, the SMART routes inside Detroit are paralleled by DDOT routes. So SMART operates on Woodward; so does DDOT. SMART operates on Van Dyke; so does DDOT. And so on.

On every route outside the City of Detroit, if SMART cuts service, its riders are absolutely stranded; there is nobody remaining to give them a ride. Within Detroit, though, if SMART cuts service, DDOT exists and so people have still got the ability to get where they are going.

So cutting the service inside Detroit to peak-only times allows the majority of SMART riders to still get to where they need to get to, it is just not as convenient. But they are not stranded as riders would be on any suburban line that was cut or reduced. [[And yet it still turned out that SMART could not continue to operate all of its suburban lines, either.)

So that's basically all there was to it - they had to cut service, and did so in such a way as to strand the minimum number of people.