Budget talks By Shea Howell

Thinking for ourselves

Budget talks

By Shea Howell

November 22, December 5, 2011

It promises to be a bleak holiday season for many Detroiters. The city is facing a $45 million budget shortfall and is likely to run out of money in April. Mayor Bing is proposing pay cuts, laying off 1000 city employees, and a 0.9% increase in business taxes. He also wants the state to pay the city $220 million that it owes from a 13 year old tax agreement.

The City Council has responded with plans of its own. The council is proposing cutting 2300 city jobs, ending support for the Detroit Zoo, Eastern Market, the DIA, the Charles H. Wright Museum, and selling the bus system. It is proposing a small income tax increase and they want the Detroit Public Schools to come up with the $15 million owed the city for electricity.

Some of this crisis comes from circumstances well beyond the control of the Mayor or Council. Since 2008 health insurance has increased by 62% to an annual cost of $186 million. The city contribution to pensions has shot up from $50 million to $120 million. Meanwhile property taxes have decreased as much as $52.5 million since 2006.

Lurking in the background of the financial crisis is the very real possibility that the state will appoint an Emergency Financial Manager, setting aside the elected Mayor and City Council. Thus Detroit would join the growing ranks of cities run by state appointed technocrats, completely unaccountable to local residents.

The dimensions of this crisis fuel the narrative that somehow Detroiters are not able to manage our own city. Woven into this story is a deeply seated racism that underlies the efforts to seize control of the city, its assets and its future from the hands of its people.

That is why it is important for us to step back from the immediate crisis to understand that the economic crisis in Detroit is in large measure the result of public policies designed to undermine governments.

At the beginning of this year the Guardian reported that more than 100 U.S. cities were likely to run out of money. Just this past month the Harrisburg PA City Council voted to declare bankruptcy, facing $458 million in debts. They became the sixth city to enter Chapter 9 this year. From Orange County California to Central Falls Rhode Island, the story of municipal failure is strikingly similar. Health care and pension costs are skyrocketing, property taxes are down, basic services are slashed and precious assets sold.

State governments are in the same situation. Our neighbors in Illinois have spent twice as much money as they have collected. The University of Illinois alone is owed $400 million. Arizona has sold its state capitol and supreme court buildings.

Much of this crisis is the result of the policies initiated in the Regan era. In the famous words of the conservative activist Grover Norquist, they wanted to get the government “down to the size where we can drown it in the bathtub.”

In the late 1970s, this policy would be dubbed “starving the beast.” Economist Paul Krugman explains, “Rather than proposing unpopular spending cuts, conservative republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.”

If we are to turn this crisis around we need to recognize it is designed to force us to submerge public discussion. It is designed to keep us from talking about the kind of city we want, how we will create it and how we will sustain it. Instead of responding out of panic, city leaders should seize this opportunity to engage in open, public conversations of how we can create our city anew.

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