Detroit Poised for Fight Against State Takeover

Abayomi Azikiwe, editor of the Pan-African News Wire, sitting at the Labor Monument in Hart Plaza in downtown Detroit on September 27, 2008. (Photo: Alan Pollock)., a photo by Pan-African News Wire File Photos on Flickr.

Detroit Poised for Fight Against State Takeover

Mass opposition to emergency manager shift debates in city

By Abayomi Azikiwe
Editor, Pan-African News Wire

Popular anger over the attempts by the state government to seize control of the city’s administrative structures, finances and pension systems has prompted Mayor Dave Bing and the City Council to publicly oppose a financial review and the appointment of an emergency manager by the governor.

A special City Council hearing on December 1 drew the intervention of the city unions who spoke out forcefully against a state takeover and for the protection of their jobs, healthcare, pensions and collective bargaining rights. A press conference held the following day featured the mayor, city council members, union leaders and several clergy.

Nonetheless, the corporate-driven Governor Rick Snyder has already made good on his threat to order a financial review of the city by state treasurer Andy Dillon. This sense of urgency on the part of the state officials are clearly related to the desire of the ruling class to break the municipal unions, to further repress politically the people within this overwhelmingly-majority African American city and to seize the approximately $6 billion in two separate pension funds.

At the December 1 hearings, City Council member JoAnn Watson pointed to the $220 million in state revenue sharing monies that are owed to Detroit. Watson claimed that a failed 13-year old agreement between the-then Mayor Dennis Archer and Governor John Engler is now worth over $550 million in lost revenue to the city.

The Governor’s office has declared that the lost revenue sharing funds cannot be a point of discussion in the resolution of the current situation involving Detroit’s debt and the threat of an outright corporate takeover engineered by the state government. Acting on behalf of the banks and the large firms, the state government has framed the discussion surrounding the indebtedness of the city to the purported failure of the municipal unions to take further concessions including pay and benefit reductions along with the possible lay-offs of up to 2,300 additional workers.

What is the Source of Detroit’s Indebtedness

Despite the ruling class’ attempt to place apportionment for the economic crisis in Detroit on organized labor which has fought over the decades for a better standard of living for its members, the actual crisis in the city relates to the obligations to pay debt-service to the banks. This reality was revealed in a recent report released by the Citizens Research Council of Michigan (CRC) entitled “Legacy Costs and Indebtedness of the City of Detroit, December 2011, Report 373.

The Citizens Research Council is led by representatives of the banks and corporations who are responsible for the economic underdevelopment and destruction of the city of Detroit. The Chair of the Board of Directors of the CRC is Jeffrey D. Bergeron of Ernst & Young LLP, the same accounting firm that authored a $1.7 million dollar audit report that provides a rationale for the imposition of austerity in the city.

Other leading figures serving on the Board of Directors of the CRC include representatives of PNC Financial Services Group, the Detroit Economic Club, the Hudson-Webber Foundation New Economy Initiative, Compuware, Wells Fargo Bank, Kelly Services, Inc., AT &T Michigan, JPMorgan Chase & Co., Comerica Bank, among others. The strongest emphasis within this report relates to the responsibility of the working people of Detroit to pay debt-service to the financial institutions.

In the Overview of the report it states that “At June 30, 2010, all funds of the City of Detroit had $6.4 billion of outstanding bonded debt, including $5.2 billion attributable to the Water and Sewerage system, and over $600 million of other future obligations. Included in the $6.4 billion in outstanding bonded debt was $1.0 billion of general obligation debt, which equates to debt of about $1,400 per resident of the city.” (CRC Report. p. 1)

This report continues by noting that “There will be $467.7 million of interest due on this $1.0 billion of principal; including principal and interest on general obligation debt equates to more than $2,000 per resident…. Failure to pay debt service on bonds is termed ‘default’ and may result in restructuring the payments and/or in state intervention under the Local Government and School District Fiscal Accountability Act (PA 4 of 2011). A default situation would seriously affect a city’s credit rating, access to future credit, and the cost of future borrowing.” (CRC Report, p. 1 and 6)

Yet the bond rating for Detroit is already at junk status and city services have been reduced to abysmal conditions. Thousands of street lights are no longer working, existing cuts in fire and emergency medical services have imperiled the safety and lives of over 713,000 residents and visitors, while the public transportation system has been stretched to the limits with over 200 buses off the streets.

The Politics of the Resistance to a State Takeover

Public opinion in Detroit is clearly weighed in opposition to further lay-offs and service cuts, the notion of a financial review by the state, the signing of a consent agreement to “reduce costs” and the dreaded appointment of an emergency manager. The Emergency Manager Law (Public Act 4) is being challenged with a petition drive that has already collected more than enough signatures to force its nullification pending a statewide referendum in November 2012.

However, the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs has stressed that the role of the banks in the economic crisis facing Detroit must be addressed in order to provide actual relief to the people. In a leaflet calling for a citywide organizing meeting on December 5 to build an alliance to fight the attempted state seizure of the city’s government and assets, it states that “City Council and the Mayor should launch an immediate investigation into the racist, predatory and fraudulent activities carried out by the major banks that have led to the destruction of Detroit’s tax base and the massive population loss caused by families being driven from their homes due to foreclosures.” (Moratorium NOW! Leaflet for Dec. 5 weekly meeting)

This same leaflet continues by pointing out that “Rather than cut public workers and services, City Council and the Mayor should place a moratorium (halt) on debt service payments to the banks pending the outcome of this investigation…. The people of Detroit are more than entitled to financial relief to prevent our city and its resources from being seized by corporate vultures.”

The Economic Crisis and the National Question

Detroit is a majority African American city with the largest proportion (89%) of this oppressed nation represented than in any other major municipality in the United States. The ruling class and the conservative Governor Rick Snyder has taken note of this factor in the broad opposition to a state takeover.

The Detroit Free Press observed on December 5 that “state efforts to begin moving toward an emergency manager could risk alienating residents of the state’s largest city, where scars remain from two separate takeovers of Detroit Public Schools—from 1999-2005 and again since March 2009.“ Quoting Michigan State University political science professor Laura Reese, who stated that “You can’t get away from the issue of race—it makes the whole emergency manager situation more volatile and uncertain….In a situation where you have a majority minority city,….it makes the whole situation of electoral representation and the people’s will just really complex. It’s still someone from the outside. It’s not the will of the people. Because of Detroit’s history, it’s different there.” (Detroit Free Press, December 5)

A convergence of national and class oppression is providing the basis for the building of a broad coalition in opposition to the forced austerity program for the city of Detroit. However, the crisis in capitalism and its impact on the urban areas of the U.S. can only be solved through the implementation of a socialist program for the rebuilding of the cities.

The well-being and development of working people and the oppressed must take priority over the payment of debts to the financial institutions. The only way this can be assured will be through a mass struggle where the working class can place its interests above those of the bankers and bosses.