It’s fitting that on the day Washington, DC is cutting the budget by an agreement that they really didn’t mean, that the city of Detroit will finally get what’s it has needed for a long time: declaration of fiscal disaster.
Michigan’s Rick Snyder has appointed an emergency city manager to do for Detroit what Obama, Biden, the UAW, GM, Chrysler, the city’s council and mayor have not been able to even with a $80 billion bailout of the automotive industry.
“Snyder’s decision comes after a state review team report concluded last week that Detroit is in a financial emergency that it cannot fix on its own,” reports the Detroit Free Press. “The report detailed $14 billion in long-term bond debt and retiree pension and health benefits the city owes in addition to a $327-million accumulated deficit Detroit has been unable to tame. That figure could inflate by $100 million by July.”
The city has been powerless to stop plunging tax revenues. According to the Detroit News almost half of the city’s homeowners have not been able to pay property taxes:
“The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city's taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.”
The article notes that delinquency is so bad that in one stretch of 77 blocks only one owner had paid their taxes.
And it’s not just that residents can’t pay. It’s that many of the taxpayers say they won’t pay taxes for services they aren’t getting.
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More from the Detroit News:
"Why pay taxes?" asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. "Why should I send them taxes when they aren't supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came."
Like America’s long decline into fiscal stupidity, Detroit’s problems didn’t have their start in the fiscal crisis of 2008. A combination union greed, corporate gluttony, short-sighted thinking from politicians at the federal, state and local level have combined to create a soup of fiscal insolvency.
Like most municipal and corporate emergencies, much of the problem starts with over-promising benefits to unionized employees and ends much later with institutions not being able to fulfill those promises.
“It needs to be said over and over again, this is a problem that started 50 years ago,” says former City Councilwoman Sheila Cockrel, a political consultant, reports the Free Press. “It’s a can that’s been kicked down the road for decades, and there’s no more can and there’s no more road.”
But at least the average American can take satisfaction that we have a thriving automotive industry, leading an American comeback in manufacturing.
Right?
Nope.
CNBC reported this week that the average Americans family can no longer afford to buy new cars.
According to a report by Intrest.com, there is only one major city where the average household income is sufficient to buy a new car.
Bingo!
You guessed it: Washington, DC.
“According to the 2013 Car Affordability Study by Interest.com,” says CNBC via Yahoo Finance, “only in Washington could the typical household swing the payments, the median income there running $86,680 a year. At the other extreme, Tampa, Fla., was at the bottom of the 25 large cities included in the study, with a median household income of $43,832.”
Only the countries of Lichtenstein and Qatar enjoy higher per capita income than DC’s median income of $86,680 a year.
Thank goodness. All this time, I thought that the runaway federal spending was just fueling a sense of entitlement, privilege and contempt for us commoners amongst the people who run our government.
For those of us lucky enough to live in areas that service federal employees, as apparently the auto industry does, we can be confident that given enough union pull, our city could qualify for a bailout too.
Just like Detroit.
It’s working out so well for them.
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