Friday, June 8, 2012

Detroit Messes Its Pants

I don't like being negative about my home town. Who does? I have previously written about the financial and criminal crisis that Detroit faces and the reasons that it has those problems. To paraphrase Ronnie Van Zant, there's good people in Detroit. And I hope that you all remember that!!! But sometimes it's hard to remember that because the political leadership has failed so miserably over the past few decades.

If you recall when last I wrote about this Detroit was facing an unpalatable choice among three outcomes.
  1. Immediate Bankruptcy
  2. Emergency Financial Manager
  3. Consent Agreement
Now no one in Detroit political leadership liked those choices but there they were all the same. It wasn't necessarily the fault of the current political leadership that they had those choices but nonetheless they were the ones that had to make the tough call. Again, unless you are from here I don't think you can fully understand the (primarily but not exclusively) racial disdain and divisions that plague SE Michigan. On local message boards and newspaper comment sections the glee expressed by some suburbanites at Detroit's horrible dilemma was in direct proportion to the anger and frustration and blame placed on the state by some Detroiters. But still when it came to it, a consent agreement was the best of bad options. After some posturing and anger, the City Council voted 5-4 to accept a consent agreement. This agreement between the city and state allowed a mutual (though state dominant) working relationship between the city and state to attempt to stave off municipal bankruptcy, which could have unforeseen and unpleasant impact on areas outside of Detroit. The state sent Detroit funds to allow for bond refinancing and avoid missing paydays. So despite some final vituperation expressed by my friends among the kente cloth and kufi wearing set, all's well that ends well. Right? Well not exactly.

No, for you see Detroit had also recently changed its charter to allow the city legal department to act independently of the mayor and city council. And the chief city counsel, Krystal Crittendon, was quite close to the council members that had rejected the consent agreement. And since Detroit had enough money from taking the deal to last a little while longer, Ms.Crittendon decided that it would be a great idea to sue the state for money it allegedly owes the city. And to her mind, the fact that the state "owes the city" means that the consent agreement was null and void. Oh yes, some of the alleged debt includes parking tickets. 

MASON -- Detroit's top lawyer expanded a list of debts allegedly owed by the State of Michigan to include bills for storm-water disposal and lighting, along with $1,255 in unpaid parking tickets, in a lawsuit she filed in Ingham County seeking to nullify the financial stability agreement reached two months ago by state and city elected officials. Corporation Counsel Krystal Crittendon's complaint, filed in Ingham County Circuit Court on Monday, says Michigan is in "default" on an additional $1.6 million in alleged debts, and that the agreement violates the Detroit City Charter, which prohibits contracts with "one who is in default." Crittendon's lawsuit also cites $224 million in revenue-sharing payments and a $4.7-million water bill at the former state fairgrounds among state debts to Detroit, the issues she raised May 11 in a letter to state Treasurer Andy Dillon when she first claimed that entering into the financial stability agreement violated the charter.  Dillon responded that the state-city agreement, an alternative Gov. Rick Snyder had to naming an emergency manager to deal with the city's financial crisis, was valid "from both a legal and commonsense perspective," and had been entered into voluntarily by the City Council and Mayor Dave Bing.

The State of Michigan was not amused and pointed out that it would withhold the remaining monies under the consent agreement, since Detroit thought the agreement was null and void. And the Mayor's office admitted that without that money the city would be broke within a week.
Detroit— The city could run out of cash by next Friday if the dispute over a lawsuit challenging the consent agreement isn't resolved, opening the door to a state takeover, Mayor Dave Bing's administration said today.Bing, who spoke this morning flanked by high-ranking members of his administration, said he has urged the city's top lawyer to drop the lawsuit but added he is powerless under the new city charter to force Krystal Crittendon to comply. Political pressure on her would not work, he said.The mayor said the lawsuit has made this a "potential worse situation than we were in, meaning that we could eventually in a short period of time run out of cash.""It is an emergency," Bing said, indicating the consent agreement with the state would be violated if the city runs out of cash. "It is a crisis and we've been in a crisis for a long time. This just ups the ante more than anything else. And I think, from a leadership standpoint, it's incumbent upon us as leaders to deal with this expeditiously, which means ASAP."Jack Martin, the city's new chief financial officer, said the city would "probably make payroll, but we'd be in a deficit position." When asked directly if the city would be broke, Martin agreed that could happen.Martin said at least $35 million has been already drawn down from the city's escrow account, but based on a letter sent Thursday by the state Treasury Department, "we don't believe they will let us drawn down any more money against that escrow account." That account was where $80 million in interim financing from the state was deposited under the consent agreement to help the city get through its cash crisis.

So you see what a mess this is. To make this even more ridiculous the Mayor just admitted that the city could not pay for the annual fireworks show  and would have to ask for financial and security assistance from, you guessed it, the state and suburbs. So let me get this straight, Detroit. You're walking around with a big load in your diapers but don't want anyone to help you, clean you up and make sure you don't do it again? You're independent and reject the consent agreement you just signed but you still want suburban/state money? You're the most violent city in the nation, but think the most pressing problem is whether or not you choose a consent agreement or emergency manager? Okay. Fine. As I've said before I understand the fierce sense of anger and independence that is part and parcel of Detroit. It was passed down. It's part of our history. Heck, the white chairman of Compuware gets it. Racism is real and it has ongoing effects. 

But when it comes to the very particular question of what are you going to do right now at this instant, what happened in the past is just not material. The political leadership of Detroit is a joke. Who signs an agreement and then turns around and sues so that they can go bankrupt and have an emergency manager put in over their objections. Just stupid. I said before and I'll say it again. Given the extreme racial and other hostility between city and suburb, city and state, the state would have been wiser just to stay out of Detroit's affairs all together. Because it is more important to the political leadership in Detroit to rule in hell than to serve in heaven. I can (almost perversely) admire such bullheadedness. I just hope that the citizens of Detroit understand that no one is riding to the rescue. Times are tough all over. I still have friends and relatives in the city who are basically held hostage to the foolishness.
What's your take?
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