The state helped

Robert Kleine is a former Treasurer of Michigan (Wikipedia says he served 2006-2011). He wrote a guest commentary in last Sunday's Free Press. That big bankruptcy that Detroit is going through -- Kleine documents the ways in which the state made it happen. Yeah, there are other factors. But the state's actions meant the difference between solvency and bankruptcy.

Much of that is the adversarial (hostile?) relations between the big city and the state that has existed since about 1980. And this isn't just a GOP thing. Democratic governors and legislatures haven't been any more friendly to the city's needs. That troublesome relationship allowed the state to do particular things that undermined the tax base of the city.

The state prompted the city to reduce its income tax, saying the state would guarantee revenue sharing to more than make up the difference. But the state then cut its revenue sharing (which hit all Michigan cities, not just Detroit).

The state passed a law allowing city employees to not live in the city. That meant the employee's property taxes went to some other city. The state created Renaissance Zones, in which taxes would be reduced to prompt homeowners and businesses to move there. All they did was to erode the tax base, leaving Detroit poorer.

Kleine suggests a few things the state could do to help the city: Allow the city to raise its income tax with an offset in the state income tax. The city department for collection taxes is based on obsolete computers; the state could take over that task. The state could create regional police and fire departments. There are also regional tax bases, so suburbs could support the city (I have a good idea what Dearborn would say about that).

Kleine says:

Detroit's underlying problems are the result of the downsizing of the auto industry, racial tensions, meaningless jurisdictional boundaries, state neglect and inattention, and the Great Recession. Balancing the books in a technical sense will not address any of these fundamental issues.