White people, seeing Emergency Managers in their future, begin to demand change

    The Detroit Free Press, in an editorial yesterday, suggested that maybe, now that predominantly white cities, like Allen Park, are beginning to stagger toward financial collapse, and state takeover, our elected officials in Lansing might be willing to look at the underlying structural issues which are pushing our communities, one after the other, toward catastrophic failure. Apparently, you see, that’s the key to change – you just have to wait until white people begin to feel the pain… Here’s a clip.

    …Without fundamental reforms, the problems of Allen Park and other cities are coming to a neighborhood near you — in fact, they’re probably already there.

    “I think it foretells things to come,” said Paul Tait, executive director of the Southeast Michigan Council of Governments (SEMCOG). “I’m confident we’re going to see more communities in trouble, further out in the next ring (of suburbs) and even in the outlying areas.”

    About 60 cities already have filed deficit-elimination plans with the state Treasury Department for budget problems in 2011, according to department spokesman Caleb Buhs.

    Up to now, Allen Park has hardly fit the stereotype of a city on the brink. With a population of 28,210, the Detroit suburb’s median household income is more than $56,000 a year; its poverty rate 6.6%. The city is 93% white and 2% African American. The home ownership rate is nearly 90%.

    Allen Park is home to the 80-foot roadside Uniroyal Tire and the Detroit Lions’ team headquarters. Ford Motor has several testing facilities in the city.

    Despite a solid economic base, however, Allen Park shows a $4.2-million deficit for 2012-13. That’s chump change for the state or Detroit, but it’s a beefy 22% of the city’s $19-million budget for next year. More than half of that budget — $10 million — is earmarked for police and fire services.

    In March, Allen Park City Council members asked state Treasurer Andy Dillon to conduct a preliminary review of city finances — the first step in a process that could lead the state to appoint an emergency manager, as it already has in Ecorse, Benton Harbor, Pontiac and Flint, or to negotiate a consent agreement like those in place in Detroit, River Rouge and Inkster. The state continues to review Allen Park’s request.

    To be sure, some of Allen Park’s budget problems were brought on by a bad investment decision. In October 2009, the city sold $25.3 million in long-term, general-obligation bonds to buy 104 acres at Southfield and I-94 to create the Unity Studios & Village project. The enterprise fizzled even before Snyder eliminated the state tax credit for most movie projects last year.

    This month, Allen Park voters defeated a millage proposal — with nearly 60% of voters against — that would have covered the $2.6 million a year in bond payments for the failed movie studio. The city is marketing the property and seeking additional tenants for the building.

    In hindsight, it is easy to criticize the investment. But rolling the dice is tempting when property values, revenue sharing and other funding sources are drying up.

    Nor can bad management account for the one-third drop in taxable values throughout southeast Michigan since 2007, or the $5 billion decline in revenue sharing Michigan municipalities have sustained over the last decade.

    “That could buy some real quality of life,” said Arnold Weinfeld of the Michigan Municipal League. “Local officials could be much further down the road in creating communities that people and businesses want to live in.”

    Between 2009 and 2010 alone, Allen Park’s taxable value dropped 10% — while the region’s decreased by 9.9%. Allen Park gets $7 million less in property tax revenue than it did in 2007, city officials say.

    Drops in taxable values especially hurt mature cities like Allen Park, incorporated in 1957, with less space for new construction.

    Allen Park officials are debating whether to put the 4-mill tax on the ballot again in November. As traditional revenue sources dry up, many Michigan municipalities have appealed directly to the voters, who have often responded with a thumbs-up, especially for millages dedicated to specific services such as police and fire.

    Besides looking for more money, however, Michigan’s 1,800 municipalities must continue to merge departments and consolidate and share services, including police and fire, to increase efficiencies.

    They also must re-examine the services and amenities they provide; many are overdue for outsourcing or outright elimination. Voters and their elected leaders must consider even more extreme measures, such as merging entire communities.

    In the long term, however, solving Michigan’s municipal funding crisis will take more than improved efficiency, cutbacks and stop-gap millage proposals. Michigan must figure out creative and stable ways to sustain healthy cities.

    The current system is untenable, leaving more and more communities without the means to provide even core services such as police and fire.

    “We’ve been saying that the Michigan municipal financing system has been broken for over a decade,” Weinfeld notes.

    At the core of this conundrum is the 1978 Headlee Amendment and Proposal A, which restrict property tax increases on existing development, making it impossible for municipalities to recoup enormous losses in property tax revenues in recent years.

    As a start, Snyder ought to appoint a task force composed of representatives from the Department of Treasury, Michigan Municipal League, SEMCOG, Metropolitan Affairs Coalition and others to recommend ways to help sustain cities and local government services.

    As Allen Park has demonstrated, it’s no longer someone else’s problem — it’s all of ours.

    It’s just too bad that it wasn’t a problem of “all of ours” when cities like Pontiac and Detroit were being forced to sell their publicly owned assets, turn off their street lights, pack absurd numbers of students into their classrooms, and stop sending fire fighters when their buildings went up in flames.

    [note: Our previous conversations on the Emergency Financial Manager Act can be found here… If you only have time for one, though, I’m particularly found of this one.]

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