March 28, 2005
I watched a very intriguing telecast yesterday, which addressed the dire financial straits of the city of Detroit.
Mayor Kwame Kilpatrick assembled a team of policy makers and economicists to put a strategy in place that would halt the city decay. Although, I was too young to remember the details behind NYC, and its bankruptcy filing, I do know that Albany bailed out the city. I imagine that the aftermath was not very pretty at all. Well, Detroit is speeding down the same path. At last report there is a shortfall of $75M in state funding, as the state of MI. is forced to deal with its own problems. I believe the city has budget deficit of $225M. Much of the conversation has been structured around lowering the property taxes, but this is only the tip of the iceburg. There are more people leaving the city than those moving to the city. Detroit has a difficult time retaining its human capital. I discussed this phenomenom in an earlier posting.
There wll be some tough choices made in the next few weeks. Certainly, there will be many casualties.
Economist David Osborne gave some very compelling arguments in favor of 're-inventing' local government, and other very interesting solutions. He also stated that Detroit must discover its value proposition. Specifically, the very dated notion that Detroit can survive on its yesteryear automotive industry. All of that industry moved out of the downtown area long ago.
Most of the other 'rust-belt' cities have figured out how to 're-invent' themselves. A prime example is Indianapolis, it too predicated its livelihood on a manufacturing economy. When it became apparent that the manufacturing market was moving offshore, Indy decided to become the amateur sports capital of the world. It seems to be working for them. What will become of Detroit?
It will definitely be rough seas for the forseable future, and the ship is already taking on water. I've got my life raft and vest stowed and within arms reach.
Posted by AG at March 28, 2005 11:19 AM