Leftists who are eager to grow the government and extend its control of our private and economic lives should look to Detroit and take note of its failure. Heck, if they really want to live out their dreams they should just move to Detroit.
But another bankruptcy is looming, and this one involves a real welfare state: the city of Detroit. Fiscally challenged communities across the country may find themselves watching Motown with equal fascination.
Kwame Kilpatrick, Detroit's "hip-hop" mayor, insists that the city is "a long way" from insolvency. Recently re-elected (a recount demanded by his opponent is very unlikely to change the outcome), he has pledged to bring to heel a projected deficit of about 10% of the city's $1.4 billion general fund. In his first term, he reduced the city's work force to about 16,000 from 20,000, mainly by allowing vacant posts to go unfilled.
But the near-collapse of General Motors, Ford and their major suppliers is posing a big drag on city finances. This comes atop a long-running failure to adjust to Detroit's decline to less than 900,000 residents from a peak of more than 1.8 million after World War II. With an accumulated deficit of $300 million, union opposition to reform, and a bond rating rapidly approaching junk status, Detroit is in crisis. As Joseph Harris, the city's auditor general until he was term-limited out of office last week, flatly declared: "Insolvency is certain. The only question is the timing of the inevitable." ...
Before Chapter 9 was adopted, judges regularly imposed judgment levies on impecunious communities. But that would only compound the problem in heavily taxed Detroit, where the income tax has already chased away most job creators and property taxes of about $8,500 on a $250,000 house have impoverished most of those who remain.
The most immediate problem is on the cost side. The Citizens Research Council of Michigan, a privately funded watchdog group, found that as of 2002, Detroit was still employing more than twice as many workers per 100,000 residents as Phoenix, San Diego or Portland, Ore. Mr. Harris, the former auditor general, calculates that in order to make ends meet, Detroit still needs to lay off half of the 12,000 workers paid from the city's General Fund--or cut the compensation for civilian workers by $27,000 each.
That level of property tax is nearly four times what we pay in California, and I wouldn't be able to afford my house if our rates were that high. Detroit also has a city income tax of 2.35% (in 2005). There's also a 6% sales tax (lower than California) and a 3.9% state income tax (much lower than California).
CNN Money rates Detroit as one of the best places to live in 2005, but the city has barely one-third the number of colleges that other "best" cities have and more than five times the crime. There's also no mention of Detroit's unemployment rate (October 2005) of 6% -- second worst among metropolionly after New Orleans in the wake of Katrina (which had just struck in August).
It looks like I misread the graphics on the CNN Money page and that Detroit wasn't actually listed as one of the best places to live. I guess it's just included in the system for comparison purposes.