The fate of Detroit could be decided this month. Long suffering Detroit could run out of cash completely by spring, and has an unresolved $200 million hole in its budget through June. Under Michigan law, when the city’s bonds drop below the BBB level, the governor can appoint an emergency manager with broad powers to put the city back in fiscal shape, including the power to annul existing union contracts. The mayor and city officials say they can manage things on their own; the state treasurer says the city is failing its legal obligations and has announced a financial review that could be completed by Christmas. Under agreements Detroit signed with banks when negotiating an earlier loan package, the city could face $400 million in penalties if the state takes control.That’s not the only problem: if the review determines that the city is broke, white Republican officials could end up making decisions that change the fate of a predominantly African American city — imposing cuts in employment, pay, benefits and services that will affect almost everyone who lives in Detroit.Detroit Free Press columnist Jeff Gerritt lays out what the governor will face if the takeover goes forward:
“Plantation” is a word he’ll hear a lot — in fact, Councilman Kwame Kenyatta already invoked it to describe what would happen if the state took control of the city’s finances in an effort to keep it from running out of money by spring…Nothing happens in this region outside the context of race. Our often-painful history is the oxygen we breathe, even when we choke on it. We’re all finding it a little hard to breathe just now.
This is what happens when politicians and stakeholders bicker while debt problems mount, and Detroit is far from the only place that could lose its autonomy to outsiders. It is no more than what Italy, Ireland, Greece, Portugal and Spain have faced in recent months, and unless the United States gets its fiscal act together, the time could come when the whole country could understand what Detroit is now going through.