(Mint Press) – Detroit is broke. The harsh reality of the Motor City is that after the American automotive industry slowed down and seized up in the 90s, Detroit — once the most affluent city in America and the former standard of American industrial might — found itself with more than half of its tax base missing.
When residents moved away to find jobs, the tax base of the city bottomed out. From 1950 to 2010, more than half of all of Detroit’s residents left to find a better solution to their economic woes — the city had 1.8 million people in residency in 1950 and 713,777 in residency in 2010. Those that remained didn’t have the means to leave and were forced to make do with what others left behind.
As a response, the state has appointed an emergency financial manager (EFM) to run Detroit until the city manages to find financial stability. Authorized under Public Act 436, this will be the largest Michigan community taken over by the state.
This was done in spite of a public referendum overturning the state’s power to place a city in receivership for financial reasons and in spite of the city’s residents’ rejection of state-based financial control. Throughout the city, residents are starting to organize to fight back against what they see as a clear overreach by the state.
“An emergency manager is like a man coming into your house,” said Donald Watkins, a city councilman. “He takes your checkbook, he takes your credit cards, he lives in your house and he sleeps in your bed with your wife. He tells you it’s still your house, but he doesn’t clean up, sells off everything and then he packs his bag and leaves.”
Political shenanigans
In 2012, Gov. Rick Snyder (R-Mich.) appointed a state review team to examine Detroit’s financial records. While the first team stopped short of declaring a financial emergency — at the time, Detroit had a budget deficit of $200 million that could have reached more than $900 million by year’s end with long-termed liabilities that exceeded $14 billion and was in danger of running out of money, a second team — that was appointed after the first team was unable to craft a tangible plan of action for the city — did declare a financial emergency.
For 2013, the city is running a $327 million deficit.
“The cash condition has been a strain on the city,” said State Treasurer Andy Dillon, a member of the review team. “The city has been running deficits since 2005 … [and] masking over those with long-term borrowing.”
Michigan’s Public Act 4, at the time, required the governor — upon declaration of a financial emergency — to appoint an EFM that will — in effect — serve as administrator of the city’s receivership to the state. The EFM would have near-unchallenged control of the city’s day-to-day executive and financial decision-making. The people of Detroit rejected such a scheme, and in November, Public Act 4 was struck down by statewide public referendum.
However, Michigan is a radically gerrymandered state. Despite Democrats winning the majority of votes in state legislature races, the Republicans managed to hold on to control due to heavily engineered voting districts. Because of this, the Republican-controlled state legislature simply issued a replacement bill, Public Act 436, for the publicly-stricken law, Public Act 4.
It has yet to be tested in court if the state legislature actually has the right to replace and restore a referendum-defeated law.
On March 14, Gov. Snyder announced the appointment of Kevyn Orr, a Washington, D.C. attorney and partner at the law firm of Jones Day, as EFM for Detroit. “The prime obligation is going to be providing services to the city of Detroit,” Orr said. “Everything is going to be on the table [for cuts] but it’s going to be driven by the data and the need, [not used punitively].”
Orr resigned from Jones Day to take this position. “This is the Olympics of restructuring,” Orr said. “If we can do this, I will have participated in one of the greatest turnarounds in the history of this country.”
While Detroit Mayor David Bing (D-Mich.) has announced his cooperation with the receivership, the city council and many community service organizations feel that the management of a community without input of its residents is political disenfranchisement and may be unconstitutional.
Civil unrest
Starting last week, a series of intentional traffic jams have been tying up the I-75 expressway and the I-94 and Lodge freeways in protest of the receivership. Most protesters are not actively protesting the actual emergency management plan, but the fact that this plan was enforced in light of clear public rejection of state emergency management.
The Rev. D. Alexander Bullock, an organizer for the group Change Against Consortium, participated in a recent protest. “Rosa Parks sat down in the wrong seat on the right bus. And she broke the law,” Bullock said in reference to the intentional traffic jams his organization sponsored in protest of the EFM. “Because that law violated her human dignity. We slowed down to the wrong speed on [the] right freeway. And we broke the law. Because emergency management violates our human dignity.”
As the takeover was done in spite of a public referendum denying the state the right to take such an action, Boyle thinks that the state government acted unconstitutionally. He also believes that this may lead to the state seizing city assets.
He has a reason to be concerned. In Pontiac, Mich., which was placed under emergency financial management by former Gov. Jennifer Granholm (D-Mich.), much of the city’s assets, such as parking meters — and public services, such as its water treatment plant — were sold to private buyers. The Pontiac Silverdome, the one-time home of the Detroit Lions, was sold for $583,000 — less than the cost of a house, at one-fortieth of its assessed value and less than half of its salvage worth.
It has been speculated that the Silverdome was sold to a potential business partner of the emergency manager.
According to TV station WDIV, Rev. Charles Williams of the National Action Network has said thousands of demonstrators are planning to make a human chain around city hall to stop the EFM from doing his job. Detroit City Councilman Kwame Kenyatta told WJBK-TV he believes that anger over the state’s action will spread beyond the city’s borders.
“The world is focusing on Detroit. I’ve talked to elected officials all over this country, and they’re prepared for a national mobilization in Detroit,” he said.
When asked if he was ready for protests at Thursday’s press conference, the new EFM, Kevyn Orr indicated he was prepared. “I am a strong believer in freedom of expression. I’m not concerned,” he said.
Detroit must stay under receivership for a minimum of 18 months. After that, the city can vote to lift the emergency financial management plan.