Yikes: Review declares a state of financial emergency in Detroit

posted at 1:21 pm on February 20, 2013 by Erika Johnsen

Detroit, that historical magnate of the American auto industry, was once the country’s fourth most populous city — but the municipality has long since fallen off the fiscal straight-and-narrow, and here come the consequences. After decades of a fleeing population and tax base, incessant cash shortfalls, and $14 billion in long-term liabilities, the state has accumulated such a hot mess of debt that a state-appointed review team is wondering if it isn’t finally time for an emergency manager to step in and take the controls away from the politicians. Reuters reports:

An expert panel concluded on Tuesday that Detroit faces a fiscal emergency in a city plagued by “operational dysfunction,” leaving Governor Rick Snyder with a controversial decision of whether to declare a financial takeover by the state. …

The review team appointed by Snyder said Detroit… has not made the financial decisions that will put the city on a path to recovery. …

The report described a chaotic administration of the city. For example, it said Police Department and city officials gave differing figures on police staffing, and the review team could not resolve the discrepancies. …

The report said Detroit continues to deplete its cash reserves and faces a cash deficit of $100 million by June 30 without significant spending cuts. The city has long-term liabilities including pensions exceeding $14 billion, it said.

An emergency manager would have the power to sell off assets, lay off workers, renegotiate labor contracts (which, as you might imagine, certain parties would find most unwelcome), and could make the decision to recommend municipal bankruptcy — meaning that the city’s mayor and city council would lose a good bit of their power, a move on which they are not too keen. Perhaps they should have thought of that while they were frittering away opportunities to make the hard choices and institute substantive, city-saving financial reforms.

Last April, the state of Michigan and the city of Detroit entered into a consent agreement allowing for some state oversight to help with the city’s troubled finances in return for some fiscal reforms, but the city was repeatedly off the mark in meeting deadlines and benchmarks — which is probably why the report suggests the city is incapable of dealing with reality on its own.

The final report also said the city’s bureaucracy is too inflexible to make the meaningful changes that would be necessary to change course.

Dillon said the state has given Detroit opportunities to get their fiscal house in order, but city official have failed to do so. “We gave the city every chance to avoid the outcome that we’re recommending to the governor today,” he said.  In a statement the treasurer said “key reform measures have not occurred quickly enough, if at all.”

Detroit’s bankruptcy, by the way, would set a new bar for the biggest municipal filing in U.S. history if it does go down.

This is a few of years old now, but this has always been one of my favorite videos from Steven Crowder; as he points out, years and years of progressive policies have left Detroit struggling in more ways than one, and the results have been nothing short of tragic.

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Maybe they could have a bake sale???

ted c on February 20, 2013 at 4:01 PM

Maybe they could have a bake sale???

ted c on February 20, 2013 at 4:01 PM

As if. The Union Thugs would shut it down.

visions on February 20, 2013 at 4:06 PM

That city obviously needs high-speed rail.

trigon on February 20, 2013 at 3:07 PM

Don’t laugh. We’re getting it. I kid you not.

totherightofthem on February 20, 2013 at 3:11 PM

OMG. They are beyond parody.

trigon on February 20, 2013 at 4:07 PM

Detroit will be America if we don’t kick the Democrats out of office and get true conservative Republicans in the White House..

sadsushi on February 20, 2013 at 4:18 PM

Maybe the muslims can do something with it. Lord knows they seem to dig Dearborn.

Bmore on February 20, 2013 at 4:28 PM

That city obviously needs high-speed rail.
trigon on February 20, 2013 at 3:07 PM

Don’t laugh. We’re getting it. I kid you not.
totherightofthem on February 20, 2013 at 3:11 PM


Sorry, but I just don’t see how America remains a viable state going forward. The idiocy and lies are way beyond typical bureaucratic follies and I don’t think it’s reformable. We live in a condition of propagandized unreality that will not sustain itself.

It reminds me of a bumper sticker I saw a few years ago. “The strange has become normal. The normal has become strange.”

Django on February 20, 2013 at 4:51 PM

Step back, ladies and gentleman. There’ a Republican chainsaw in town, and its name is Liberty. Liberty will attempt to cut away 50 years of liberal infestation. No, it won’t be pretty. It won’t even be functional. Unions will attempt to burn down what little is left along the way.

No, don’t thank us. Your children who survive will do that later. In the meantime, we’ve got a war to start. Thank you,

The Republicans.

HopeHeFails on February 20, 2013 at 5:22 PM

totherightofthem on February 20, 2013 at 2:45 PM

Sorry for my delay in responding, but my internet connection went out and I haven’t had a chance to respond, until now.

Allow me to apologize. Your intent wasn’t to be snarky, and so I misinterpreted your post. I guess this happens when you only see the written word, and don’t hear it spoken.

Again, my apologies to you.

OhEssYouCowboys on February 20, 2013 at 5:33 PM

Maybe Mikey “Lumpy” Moore will kick in a few bucks to help…

Del Dolemonte on February 20, 2013 at 6:09 PM

“Yikes”?? LMFAO. Detroit’s been in financial crisis since before you were born, Erika. That’s why it’s been such a 3rd world shithole for DECADES.

rayra on February 20, 2013 at 6:11 PM

Keep voting democrat!

Utopia is round the corner!

tom daschle concerned on February 20, 2013 at 6:36 PM

OEYC: No apology needed. I wasn’t very clear. But I thank you, anyway, for the courtesy. We don’t see that too often nowadays. Patience running thin and nerves a bit raw, it seems lately.

totherightofthem on February 20, 2013 at 11:00 PM

The catastrophic decline of Detroit was not just due to liberal policies, arguably the main reason was the flight of mostly white (and some middle class blacks) out of Detroit over the years because of the huge amount of black violent crime especially after the deadly & destructive riots of blacks in the summer of ’67. Depending on the reporting the city population is 82% to 90% black.
Is there any city in America with a large black population (say >25%) that doesn’t have major crime and economic problems with many whites fleeing? Detroit tops the list of dangerous cities:


It seems to me that conservative are simply afraid to pin the problem mainly on black violent crime, so they fault the liberal policies.

Chessplayer on February 20, 2013 at 11:25 PM

Personally, I don’t believe Detroit will do what’s necessary to solve the problems, but I do feel sorry for the citizens. These are the low information voters who believe Obama has a money tree in the back of the WHite House and can solve all their problems with a decree that it be solved. There are people who believe that Obama needs to “bring home the bacon” because they voted for him and that will solve the problem. Until that’s gone, you’ll never solve a problem.

bflat879 on February 21, 2013 at 7:52 AM

totherightofthem on February 20, 2013 at 2:43 PM

witness D.C.’s actual landscape outside of the tourism-based enclaves and monument-status acreage.

hillbillyjim on February 20, 2013 at 3:14 PM

Reading your comments reminds me of D.C., where I lived for 25 years. It was a decent place to live and work when I got there, but it turned into a s##thole before I left.

petefrt on February 21, 2013 at 8:07 AM

What the sequester looming, might as well let detroit default on its debt. Too many blood suckers there in detroit.

jake49 on February 21, 2013 at 8:40 AM

“Are comedians going to mock Detroit for decades after they mocked us relentlessly after merely going into default in 1978?”

– the entire City of Cleveland

Myron Falwell on February 21, 2013 at 9:08 AM

There is a plan for Detroit’s bankruptcy. Demagogue anyone within State and Federal government who do not support bailing out Detroit.

jpmn on February 21, 2013 at 10:15 AM

Considering that the place is run by black Democrats, why is anyone surprised?

federale86 on February 21, 2013 at 2:45 PM

As I said. Property taxes are not being paid, to the tune of more than 240 million dollars in 2011.

One of the best quotes? “Why should I pay when no one else [on my block] pays their taxes?”

And, greatest hit number two: “Only a small percentage of property owners pay and it’s not fair for that small group to carry the load.”

Try to get this brain trust to see that the same thing applies to income taxes, but nooooooooooooooo. *sigh*

totherightofthem on February 21, 2013 at 3:49 PM