Detroit's financial challenges -- the decline of the American auto industry, the impact of the global economic recession, declining population and an erosion of the municipal tax base -- are key to understanding what led this great city to an inability to provide basic city services, or to carry out the normal functions of a municipality.
The decision to file for Chapter 9 bankruptcy protection in federal court for the city of Detroit was misguided in my opinion, giving a federal judge the power to make decisions that should be made by elected officials. However, in the wake of the decision by the bankruptcy judge to allow bankruptcy to proceed, city officials and citizens should not stand by as observers. A deal still has to be made to rescue the city and all stakeholders should have some say if the end result is to sustain a vibrant and viable city.
Here's the way I see it: The concept of "too big fail" has become a phrase often used to articulate the challenges faced by the corporate community when the federal government made the decision to prevent massive default and to justify intervention in order to prevent catastrophic consequences to the economy. Why should this concept not apply to the public sector? The very foundation of our nation's economy is predicated on the health, growth and vitality of our local communities.
It would behoove all parties involved to view this current challenge faced by Detroit as a warning shot across the bow of every city that now finds itself faced with declining revenue, exploding costs for even basic city services and the need to maintain the integrity of its workforce -- past , present and future. One example of the disruption of a Detroit bankruptcy will be the increased borrowing costs to other cities across the state -- potentially impacting the ability of these cities to provide services to their communities.
The discussion of what is or will be required to implement any strategy based on Chapter 9 bankruptcy protection must include a long- term view of how this city will be able to rebound if all potential assets are bartered away in this process. This includes the value of the city's art, culture and real estate assets. The bankruptcy process has the potential to pit segments of the community against one another at a time when the ability to succeed depends on them coming together in the name and spirit of community.
Article IX, Section 24 of the constitution for the state of Michigan explicitly states pension payments are a contractual obligation of the state. The presiding judge has already stated that because the case is being handled in federal bankruptcy court; state pensions do not get special protections. It would seem then, that as a major employer in the City of Detroit, this would adversely affect a significant portion of the city's workforce leading to economic dislocation and hardship, which calls forward the concept in the public sector "too big to fail."
The right of the people to be heard and to participate in the decisions affecting their lives is a fundamental principle that should not be sacrificed in the rush to embrace bankruptcy as a solution. It is imperative that all citizens including leaders at the local, state and federal level engage in a process, which provides an opportunity for a true public/ private partnership; the goal of which is to ensure that the revival of Detroit is based on maximizing the strengths of its people and the determination not to fail!
Please join me in signing the Change.org petition calling for alternatives to Detroit's financial problems.
Ron Dellums served on the Berkeley, California City Council from 1967 to 1971, U.S. House of Representatives from 1971 to 1998 and as Major of the City of Oakland, California from 2007 to 2011.