Economic Woes: Detroit MI Trying to Shrink Itself

 

Detroit mayor Dave Bing says the city plans to encourage residents to move from some neighborhoods: 'If they stay where they are I absolutely cannot give them all the services they require.' (Dale G. Young / The Detroit News)

Detroit Mayor Dave Bing

 

Sometimes governments have to do what businesses do when revenues shrink—cut back.  As financial woes continue in Detroit, this looks like the move to make.  The big problem there is that vast tracks of the city are sparsely populated and the cost of providing city services to these areas is a problem in light of the city’s $ 325 million deficit.  So mayor Dave Bing wants to shrink the city’s footprint by relocating residents in a desperate bid for Detroit’s survival.  The city can save money by not having to provide city services to far flung areas.  According to a study completed by the mayor’s office, one-third of the parcels in the city are either vacant lots or abandoned homes.  That means that the property tax base has eroded.  Unfortunately, attempts to replenish the tax rolls haven’t worked well as there aren’t any takers for houses being auctioned for as little as $ 500.

Detroit is in a very bad way with upwards to 50% of its working age population unemployed and Bing is in negotiation with municipal employees represented by AFSCME for concessions on things such as:

  • Reducing vacation and sick days for new hires, including eliminating up to six bonus vacation days if they don’t call in sick.
  • Dropping coverage for fertility and impotence drugs such as Viagra to save $1.6 million a year.
  • Stopping employees from being able to add adult dependents — parents or adult children — to their insurance as long as they pay the monthly premiums.

No, I’m not making this list up.  The union will be hard pressed to ask Detroit taxpayers to pay for that which they themselves do not have.  Moreover, the city doesn’t have it to give.  This is a bit like fighting over a dead corpse.

For places in financial distress, people will begin voting with their feet and that may be the coup de grace for cities like Detroit and by extension, its union. 

 

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Comments
2 Responses to “Economic Woes: Detroit MI Trying to Shrink Itself”
  1. People fail to realize that all American cities were once unincorporated lands. They all had to petition the state to receive a charter to become a city.

    The entity in question had to show that by given the authority to collect its own local taxes that this would result in a higher quality of living for the citizens as the new municipal authority provided the services that the county or state had previously provided.

    I have argued that if the de-incorporation of a private company (ie: bankruptcy or closure) is the way that the market clears itself of firms that are insolvent, thus listening to the market indicating that THEIR SERVICES ARE NO LONGER DESIRABLE – there needs to be a similar process for municipal governments.

    Instead cities are given special protected status. The state or the federal government is expected to shovel monetary resources there way because after all “there are people still living there”.

    Some cities are dinosaurs. Their expansive size but sparse population do call for them to shed some of the land that they had acquired through their own sprawl.

    Detroit is a basket case. They will only come out of this death spiral when they indeed face the bitter truth and shed some of the resources that are weighing it down.

    • Greg L says:

      As you point out CF, the bad thing is money being continued to be being poured down a rat hole. I’m not sure if Chapter 9 municpal bankruptcy avoids any of this and I’m guessing that it’s merely a mechanism to restructure the finances, which in the case of Detroit, may not do all that much. That city is dying and as people vote with their feet its death will be accelerated because that will further erode the tax base. I was just in Detroit a couple of weeks back after having not been there since I was a young child. It is a substantial city, or at least the downtown area is, with beautiful real estate. I really like older brick homes and it has an abundance of them not far from the downtown area.

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