Thursday, December 29, 2011

The Coming State Takeover of Detroit – An Experiment to Be on the Impact of a Powerful Czar in Ruling a Once Great American City

Can Conservative Business Management Save a Struggling Metropolis?  - The Nation May Find Out in Detroit

The letters on an overpass used to spell “Motor City.”
 Until a recent report, talk about Detroit’s economy had been hopeful.

The economic situation in Michigan in general and in Detroit in particular is well known, and the New York Times takes another look at things with an eye on what might happen in the future. In its largest city voters finally got disgusted the tossed out professional politicians in favor of giving the mayorality of Detroit to Mr. Dave Bing, a former basketball star and successful businessman.  So far things are not better.  The dire economic circumstances of the city are this.

Detroit is poised to run out of money by April and fall deep into debt by June. Now a place that had seemed to be finding its balance is reeling once more. . .

This fall, Mr. Bing warned that Detroit would run out of cash without major cuts, particularly layoffs and deep salary reductions.

Within days of Mr. Bing’s announcement, state officials said they were starting a preliminary review of the city’s finances, which concluded this week with the announcement of a deeper state look at the books and an alarming snapshot of Detroit: more than $12 billion in long-term debt, an estimated general fund deficit of $196 million and no sufficient plan for dealing with the shortfall.

Ok, so what is to be done?  Michigan elected a Conservative Governor last year and handed control of the state legislature to Republicans.  Anticipating this problem they enacted a law that allows the state to take over the city if economic conditions warrant it.

For Gov. Rick Snyder, a Republican and businessman elected in the wave of Republican statehouse victories in 2010, Detroit’s crisis comes at a complicated moment. Earlier this year, Mr. Snyder and the Republican-dominated Legislature passed a law adding vast powers to the emergency managers sent to troubled Michigan cities, including the ability to throw out union contracts.

And while the law is controversial, it is there.

Critics said the law was an attack on democratic principles and an assault on labor unions. A lawsuit is pending. A campaign to repeal the law is under way, raising the possibility that the current emergency manager law could be suspended until the vote — even as the state’s most significant city may be on the verge of being assigned one.

Detroiters don’t want a state takeover, but the Governor clearly wants to do so, as evidenced by his strong denial that a takeover is not what he wants

State officials insist that the steps taken do not mean that an outside manager will necessarily be appointed in Detroit. For his part, Mr. Snyder, who had never held political office before, seems put off at suggestions that he hopes to step in.

“Why would I want an emergency manager?” Mr. Snyder said in an interview. “I’ve got plenty to do as it is. It’s best if we’re a supporting resource and they resolve their own issues with support.”

In politics, particularly where a position is unpopular the statements that a person does not want to do something is likely an indication that they do want to do it.  Mr. Snyder clearly pushed through the greater state powers specifically to deal with Detroit, and if he does exercise the option to take over the city, he can abrogate union contracts and possibly destroy public employee unions in the city, which is certainly one of his goals.

So looking ahead to 2012 the odds are more likely than not that the state of Michigan will take over control of the city of Detroit.  It will terminate almost all union contracts, cut spending, and attempt to impose Conservative principles of governance on the city.  It may also bring in sound management concepts, ones that will improve productivity and efficiency in city government. 

Politics and good management have almost always been at odds with each other. In 2012 everyone will likely see if they can co-exist in bringing Detroit back from financial ruin, whether it is by a state takeover or by Detroit managing to succeed by itself.  But politics are the driving force for 2012, and politics, regardless of the particular nature of the the political philosophy, almost always trump good management practices.

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