DETROIT – For the third time this year, the city of Detroit is staring at potential bankruptcy as legal wrangling over “control” has caused $10 million in state aid to be withheld from the city. The continued issues between the city and state of Michigan have led the state legislature to talk about numerous options for the city, including potentially dissolving the city altogether.
“If we have to, that is one idea we have to look at,” State Sen. Rick Jones said. Jones, a Republican representing Michigan’s 24th district, said that dissolution would be a drastic step but everything is “on the table” including Chapter 9 Bankruptcy.
“We really have to look at everything that is on the table,” Jones said. “Again, if this goes to federal bankruptcy, every employee down there will suffer, the city will suffer and the vultures will come in and take the jewels of Detroit and they will be gone.”
Michigan Gov. Rick Snyder also acknowledged that anything was possible in terms of how to handle Detroit’s financial situation, even though dissolving the city would be a last resort. Last week, the Detroit City Council rejected a contract with the law firm Miller Canfield that would’ve allowed the firm to help handle the city’s financial recovery plan.
The rejection was apart of an ongoing power struggle between the state, city council, and Detroit mayor Dave Bing, which could ultimately lead to Detroit becoming the largest American city to ever file for bankruptcy. Bing has already threatened city employees with temporary layoffs starting in January, as the city stands to be short by $30 million.
“In order to compensate for the deficit, the city will begin to institute unpaid furloughs and other cost-saving actions, effective January 1, 2013,” Bing said on Nov. 21. “We will ensure that revenue-generating departments are not impacted by these cost-cutting measures. These actions are necessary to keep the City from falling into further financial distress.”
Some city residents and advocates insist that the city does not need the state’s help and that it is the state of Michigan that needs to answer to Detroit. To others, including former city communications director Karen Dumas, the city needs to face the reality that it no longer has any leverage in the matter.
“[Bankruptcy] would be unfortunate and unlikely for it to happen only because of the impact of it doing so and the impact that it would have on the state and the surrounding areas,” said Dumas, who served under Bing as well as former Mayor Kwame Kilpatrick. “On the other hand, it would also erase some of the legacy costs and debt that the city has been burdened by because people are unwilling to recognize the damage those things have caused.
“We’re still, as a city, still managing some rules and union contracts that, much like the 1967 conversation, [are] extremely outdated. We have too many people in this city doing too little for too few.”
Dumas, who currently runs a public relations company in Detroit, described the city as being inefficiently run and said has many officials she feels are invested in maintaining the status quo. She also said the city needs to be made more operationally efficient instead of waiting on incremental aid from the state and federal government.
“We look at getting money from the state at $10 and $20 million increments to hold us over,” Dumas said. “That’s not changing the fabric of how this city operates. We’re just like people who are financially compromised situations in their homes. [The city] is living check-to-check.”
On Thursday, Bing said during a taped interview that he felt that members of the city’s government carried a sense of entitlement and referred to his job as “probably the second most difficult in the country.” Bing told theGrio in August that his administration inherited a “hell hole” in 2009.
“We are in an environment, I think, of entitlement,” Bing said in the video. “We’ve got a lot of people who are city workers who for years and years, 20, 30 years, think they are entitled to a job and all that comes with it.
“Nobody wants to go backwards, but in order for us to move the city forward, we are going to have to take a step or two backwards and then, I think, all of us have to participate in the pain that’s upon us right now.”
Bing said that within 10 years that the city will have a renovated riverfront, thriving downtown, and stable, more densely-populated neighborhoods. Detroit, which is 140 square miles, has sections where residents currently have only one or two occupied homes in their neighborhoods, including some that have no working streetlights.
“We’re going to try to convince those people that they need to move, so there’s density in all of our neighborhoods,” He said. “I don’t think Detroit is going to be what it was [in the 1950s]. We have to look at ourselves differently. I don’t know that we’re going to be the same blue-collar town that we were.”
Dumas, who was let go by Bing in 2011, feels that the entitlement culture has helped exacerbate the problem and led to contentious – often racially charged – meetings between residents and city leaders. She feels that part of the problem also lies with the residents not using good judgment in electing officials, often “recycling” familiar names.
“In this community, we have a 50 percent illiteracy rate that has to be acknowledged,” she said. “We also have people that have been elected to ‘lead’ – for lack of a better term – based on emotion, name recognition, and based on their ability to be recycled from other areas.
“I believe that a lot of these [city officials] understand that much of the voter base functions on emotions, as well as being uninformed or misinformed and they capitalize on that at the expense of the people that they serve. They mention civil rights, or racism, or ownership. People get upset, but they don’t know why.”
With the potential of bankruptcy looming in the coming new year, time may be running out on the city to make up its mind. Fear of not being “in charge” has pushed the city once again to the brink and has the city staring at an uncertain future; rhetoric about “dissolving” the state’s largest city will likely not help matters.
“Making that [dissolving] statement just seals the disconnect,” Dumas said. “The likelihood or reality of dissolving a city is all but non-existent. That’s not the way to solve the problem.
“I do think that at a certain point, people in the city – both those that live here and those that are charged with leading it – have to recognize that there may be some drastic options around the corner if there’s not some proactive engagement. The city of Detroit did not get this way overnight, and it’s not going to be addressed overnight.”
Follow Jay Scott Smith on Twitter @JayScottSmith