On the surface, last Friday’s announcement by Michigan Governor Rick Snyder that Detroit’s financial situation was so grievous that a special emergency financial manager (EFM) would have to be appointed to take over from the city council appeared to be the end of the line for a once great city.
A city that was once the fifth largest and wealthiest in the country, Detroit appears to have hit bottom. It has lost nearly 60 percent of its population since its peak in 1950, its tax revenues have declined by $100 million in just the last decade, and one-third of Detroiters now live in poverty. So cataclysmic has been the decline that the governor is having trouble finding someone willing to take on the job of Detroit’s EFM.
Mara MacDonald, a local TV reporter who is close to the epicenter of the Detroit disaster, wrote: “There is no possible way for Detroit to fix its long-term liabilities and short term cash burn without the assistance of an emergency financial manager and possibly a bankruptcy judge.”
The numbers are indeed appalling. According to Snyder, Detroit has a $327-million budget deficit and more than $14 billion in long-term debt. And this is somehow to be serviced by a population of just 700,000 people, many of whom don’t pay taxes, or refuse to. There are 77 blocks in the city where just one taxpayer pays his real estate taxes. The photographs of decrepit residences are commonplace. Just type “Detroit Disaster” into YouTube. Even banks are walking away from their own REOs.
The city set another record: It just reported its highest homicide rate in 20 years. More people were killed in Detroit during a period of time when the city’s population was declining and gun crimes nationally were also declining. David Martin, director of the Urban Safety Program at Detroit’s Wayne State University, noted, "At least two-thirds of the homicides in Detroit are related to drug sales, disputes between people selling drugs or disputes between people owing people money about drugs.
Detroit has another sad record: In 2012 it had the highest rate of violent crime of any city over 200,000 population in the country, according to the FBI.
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Photo of downtown Detroit skylin