Den of the Cyphered Wolf

Wednesday, October 3, 2012

The Bottom Line of the Water Strike

While the current Detroit Water strike is a very serious issue, I feel that it is a consequence and facet of Detroit's larger financial debate.

However before I discuss it let's talk about some of the relevant parties and the general relationship between Detroit's city and Michigan's State government.

Before I talk about Mayor Dave Bing and Governor Rick Snyder specifically, I want to point out that both men came in after long incumbent periods. Mayor Bing is the first elected mayor of Detroit after Former Mayor Kwame Kilpatrick whom was mayor for 6 years, former Acting Mayor and current City Councilman Cockrel aside.

Not unlike Mayor Bing, Governor Snyder came in after the Granholm administration which served for 7 years. Both mens' administrations saw several changes in their respective areas of government under their leadership.

Mayor Bing
Many people, admittedly including myself, feel that the Kilpatrick administration took the city for a ride. Let's just say I've heard some cowboy stories.

If they are true or not will be discovered by the current trial, but my point is that many of the woes of the city can be attributed to corrupt or inept administration. There is a feeling that permeates Detroit and even the suburbs that its municipal government is uninterested in or unable to do the basic things that residents should be able to take for granted, pick up garbage, light the streets, protect them from crime, provide for public transportation.

This perception of public corruption and ineptitude is one that the Bing administration has been rallying against. Now let me be clear. I am not knocking the people of Detroit, merely pointing out some of the problems the city has. Most of the people I come across are folks just trying to get by in a rough town in rough times. To that end the Bing administration has had to deal with the underlying problem of trying to fix the city. The money isn't there

I could write an entire dissertation on why the money isn't there, but that is not the point. The point is that fixing things in the city is going to require funding that the city currently does not have. Furthermore the city isn't even breaking even in terms of finances and that brings in a new set of problems.

In trying to deal with the city's financial problems the mayor has made several controversial moves.

Governor Snyder
Governor Snyder is a fiscal conservative. Many of the changes of his administration have been aimed at cutting state spending. His 2012 budget was particularly controversial because of this. However, as a result of the cuts the state currently has a $457 million surplus.

Governor Snyder has a complicated relationship with cities of the State because of two reasons the first is that his administration, in an attempt to make local governments more accountable and transparent, changed the rules of how revenue sharing works. A lot of the money that some municipalities use are actually provided through the state's revenue sharing program. Municipalities until recently generally believed that they could predictably budget the funds provided through revenue sharing. The Snyder administration changed things by requiring municipalities to meet certain conditions in order to receive revenue sharing dollars.  

The second is the recently suspended for a public referendum Public Act 4, the emergency financial manager law.

I feel as though the ballot language on the referendum of the law, proposal 1 does a good job at explaining it so I will "borrow" it.

 Public Act 4 of 2011 would:
  • Establish criteria to assess the financial condition of local government units, including school districts.
  • Authorize Governor to appoint an emergency manager (EM) upon state finding of a financial emergency, and allow the EM to act in place of local government officials.
  • Require EM to develop financial and operating plans, which may include modification or termination of contracts, reorganization of government, and determination of expenditures, services, and use of assets until the emergency is resolved.
  • Alternatively, authorize state-appointed review team to enter into a local government approved consent decree.
And now for the particular problem. Because of the dire straits of Detroit finances the law could easily be applied to Detroit. Furthermore the Detroit Public School District already has an emergency financial manager though to be fair they had a previous one under Public Act 72, a previous version of the financial manager law.

Detroit City Council
It is difficult to summarize the role of the Detroit City Council in financial talks between the city and the governor, however it can be said that they have been very resistant to changes proposed by both the mayor and the governor going so far as to subpoena the mayor for information on his plans. The council has been a vocal opponent of a reluctantly voted for consent decree, whereby the mayor and a state appointed financial advisory board would have powers to restructure various operations of the city.

They have also been opponents of other proposed changes such as the lease of Belle Isle Park to the State of Michigan.

It Hits the Fan
While it was somewhat common knowledge that the city had a lack of funds, in the tail-end of  2011 reports started coming out painting a picture of just how bad it was. One report stated that without major change the city would run out of money by spring of 2012.

I believe that the reasons why this would be bad are self-evident, but allow me to go through them. If the city were unable to make its payrolls, buy gas for fire trucks and police cruisers, or provide for even the most basic of services that would be bad.
The Consent Agreement

In March of 2012, the city was officially declared to be in a state of financial emergency, allowing PA 4 to come into action. In an attempt to avoid an emergency financial manager the city council voted in favor of a consent agreement, allowing a state appointed board numerous powers, including the power to amend various city contracts. The consent agreement also allows the mayor to renegotiate or even terminate union contracts. Through the consent agreement the state also has the right to withhold revenue sharing dollars or place the city under a financial manager if it feels that the city isn't upholding its end.

Almost immediately the agreement was disputed in court. Several parties separately sued to void it, including the Detroit City Attorney Kristal Crittendon. Despite the lawsuits the consent agreement held up.

The Water Report
In the mist of all the talks of cuts, in August a report came out describing bureaucratic waste in the city's water department. As a result the city laid down plans to reorganize it, including (possibly) cutting 81% of its workers over 5 years.  And that people is where we are.

Correction: While the 81% number had been thrown around, some officials are doubtful that cuts would be that deep.

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