No one in Michigan could have been surprised when a state-appointed review team reported this week that Detroit is in a financial emergency. That’s actually far too mild a term.
The city has a projected budget deficit that approaches a third of a billion dollars. Its long-term, mostly unfunded liabilities are nearly $14 billion. The city is mortgaged to the hilt, is about to run out of cash, and can’t borrow more.
Gov. Rick Snyder has few options left, other than to appoint an emergency manager who would have the power to liquidate debts, break union contracts, sell city assets, and possibly lead Detroit through bankruptcy. What happens after that — how a broken city rebuilds itself — nobody quite knows.
It’s easy for residents of Toledo, or nearly any other city, to feel smugly superior to Detroit. They shouldn’t. Sixty years ago, Detroit was a thriving powerhouse of 2 million people, most of whom lived in pleasant neighborhoods lined with elm trees and worked in the city at good jobs that paid good wages.
The common myth is that Detroit was destroyed by racial tensions, a horrific riot, white flight, and black poverty. Those things all played parts. But Detroit was also brought low by years of neglect of the city’s infrastructure and willful ignorance of the laws of economics.
For years, the city agreed to municipal union contracts with pensions and long-term benefits it could never realistically hope to pay. In recent years, Detroit headlines have been dominated by a flamboyantly corrupt ex-mayor and a bizarrely irrational city council. But the city’s fate probably was sealed before they helped take it over the cliff.
Toledo is not Detroit. But Toledo is also an aging manufacturing city with troubled schools and a declining population. Nobody in 1960 could have imagined Detroit as it is now. Our task is to make sure that in 2035, others aren’t looking at Toledo as an example of what to avoid.