Detroit’s recent history is littered with many false claims of an impending turnaround, and successful emergence from bankruptcy is no guarantee of revitalization, according to commentary today in The Times Herald by James Hohman, assistant director of fiscal policy at the Mackinac Center. To ensure an authentic recovery, state government must remain actively involved for the foreseeable future. By reducing its debt in bankruptcy, Detroit will free up funds to reinvest in current operations. Without bankruptcy, legacy costs threaten to take up two-thirds of the city’s revenue in coming years, he said. This extra money will help Detroit improve management. According to the state’s report certifying a financial emergency, the city’s managers were overspending budgets for years without the authority to do so, and internal reporting was in shambles. Emergency Manager Kevyn Orr’s debt-readjustment plan assumes that the population will drop to 625,000 by 2020, a loss of another 60,000 people, which Hohman thinks will weaken an already dangerously soft tax base. It is not the state’s job to manage contracts or administer information technology for Detroit, he said, adding that the state needs to monitor the city.
