Thursday, April 21, 2011

What're you gonna do?

With a city government (or school board, or...) that not only spends through it's tax revenue, but exhausts its' bonding ability, and then still runs a massive deficit?

Well, in Michigan, they have an answer - an exceptionally powerful "Emergency Financial Manager" appointed by the Governor, under certain fairly specific conditions. The EFM can do a number of fairly exciting things - unilaterally modify or abrogate contracts, push the city into bankruptcy, or push the city into either merging with another entity or simply going out of business. And city elected sorts are barred from exercising their powers without the written consent of the EFM for the duration.

It seems the City of Benton Harbor, MI (a suburb of Detroit apparently noted for corruption) has achieved this status. And gee whiz, the usual suspects are peeved at having their toys taken away.

Well - what can you do with a City Gov't (or other such) gov't gone fiscally rogue? At some point, the ability of the local folks to absorb new taxes is exceeded, and the area economy implodes as employers and citizens move to greener pastures... and you are still, as a city, broke and in debt...but now with even fewer to financially support your foolishness.

2 comments:

Anonymous said...

A few corrections: 1. Benton Harbor is on the shores of Lake Michigan and is not a suburb of Detroit. The two cities are about 185 miles apart. 2. Benton Harbor city officials are not noted for corruption. They're more known for their naivete, poor governing skills, poor negotiating skills, and poor political skills. There's very little sinister there, just sadness, depression, and poverty.

AM said...

What I don't understand is how Detroit has tax revenues of around 750 Million dollars, a proposed budget of 3.1 Billion Dollars, and the "deficit" is only 208 million dollars.

I guess the good people of Michigan have to be adding some money to the pot, as well as the rest of the United States as well.

I guess the "urban archipelago" is fine as long as they can suck money from outside the city to keep the lights on. As someone who doesn't live in a city, I find that being treated as a sheep to be sheered a bad thing.

With the increased "urbanization" of the world, something will have to give because those in "flyover country" are not going to be willingly fleeced forever.