The 3.0 agenda: Detroit

I want to apply the Friedman and Mandelbaum standard I wrote about in my last post to Detroit. They insightfully  assert that “the purpose of the exercise: It is not simply to reduce the deficit but to insure prosperity. Solvency is vital, but it is not enough.” Insuring prosperity, not balancing the budget should be the outcome we want from what will have to be a restart of Detroit.

As we have written frequently, Governor Snyder deserves enormous credit for his courage in asserting – we believe correctly –  that Michigan cannot succeed unless Detroit succeeds. The evidence from across the country is clear: with few exceptions prosperous states are anchored by even more prosperous big metropolitan areas anchored by a vibrant central city. (In the Great Lakes think Chicago and Minneapolis.) So it is not just Detroit’s prosperity that is at stake, it is all of ours.

The path we are headed on now is one where balancing the city government’s budget is the goal. What I call managing decline. Not smart! Rather the goal should be growing the city. Does the city need a long-term structurally balanced budget? Absolutely. The city’s finances have been mismanaged for decades. The fact that elected officials in Lansing – from both parties – have not done anything about it before has been irresponsible. Insisting that it be fixed now is without question the right course.

But just getting to a structurally balanced budget should not be the end game. What is needed is a structurally balanced budget that allows the city to provide the necessary quality services so the city can retain and attract residents and businesses. And the reality is the city no longer has the tax base to do that even with a structurally balanced budget that substantially lowers the cost of delivering services. The notion that Detroit can provide the quantity and quality of public services needed to attract new residents and businesses simply by lowering labor and retiree costs, contracting out more services and eliminating departments and functions – all of which needs to be done – is a fantasy.

So is the widespread belief that this is all the fault of irresponsible and/or corrupt city officials. Certainly that is a big part of the problem. But so is the state’s disinvestment in the city over the past decade. The Michigan Municipal League estimates state revenue sharing cuts cost Detroit more than $450 million over the past decade. The League writes: “People often assume that these state cuts are due to declining state revenue. But the state’s sales tax revenue, the funding source of revenue sharing, has only dropped by 4 percent from 2001 through 2010. By comparison, revenue sharing payments to Detroit have fallen by 28 percent.”

What is needed is both a structurally balanced budget and strategic regional and state investments in the revitalization of  Detroit. That means some combination of a resumption of state revenue sharing to provide quality basic services starting with public safety broadly defined and strategic investments in critical amenities like transit – including light rail on Woodward, ideally into Oakland County – parks/outdoor recreation and the arts.

And the fact that the city government cannot be trusted to deliver those services with quality cannot be an excuse. Fixing that needs to be part of the agenda. Either by building the city’s capacity to deliver quality services or by providing the services through other public bodies. Across the country essential services are delivered through a variety of  special purpose districts and authorities. The same can and should be done in Detroit. The Milliken Administration put state police on Detroit’s freeways when the city could not ensure public safety. The Snyder Administration created a brand new state wide school district without legislation. That same creativity can and should be used to insure that those who live in Detroit  get the kind of services that are essential to retaining and attracting residents and businesses.

It is the combination of lowering labor and retiree costs, contracting out more services and eliminating departments and functions that result in a structurally balanced budget combined with strategic state and regional investments and new and or improved service delivery systems that will create a vibrant Detroit. Which will then be an essential asset, rather than huge liability, in recreating a prosperous city, region and state.

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Lou Glazer

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

This Post Has One Comment

  1. First off! How about the governor and the legislator stop stepping on my rights as a Detroit citizen. Now privatizing our public assets will not help Detroit. So to fix my city stop all the private contracts that use to be done as a public service. Private business has to make money not government so I would like for my city services to be done by city residents. Speaking of our city services being done by city residents brings me to say bring back residency laws that will keep our jobs in the city and give our city tax revenue.
    How about turning some of the city of Detroit that is empty in Renewable energy area’s- Solar, wind and hydrothermal communities. This will create good paying jobs plus those building the infrastructure projects can buy the homes also.
    Now stop destroying our schools so their friends can get rich off my tax dollar. Eliminate the debt the STATE OF MICHIGAN has put DPS in with the years of miss management of our finances. Make Detroit PUBLIC Schools the schools of the future. Education, Good wage paying Jobs and small business opportunity is what will make Detroiters and Detroit prospers!

    I am a life long Detroit born in 1973, graduate from DPS schools in 1991. Did we have problems with our schools yes but in 1996 we pass a $1.5b bond to improve our schools so that today our children would be prosperous.

    But Engler and Archer has other ideas, like all their friends that got rich off of DPS(my dam tax dollar), a way to destroy public schools so it can be privatized, make the children in the city of Detroit the future workers for the State of Michigan(well when those children are not getting educated the only job for them is prison)and now we want to privatize our person to big corporations.

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