It is sad indeed that a once great city has fallen apart financially and in other parts of its structure. Detroit has filed for bankruptcy to no one’s surprise because it has been declining for years.
Can what is happening to Detroit occur to other governmental entities? Other cities and counties are having tough times and have debts that run into the billions. Detroit far outpassed the others in debt, owing about $18 billion. This area is fortunate that, to the best of our knowledge, none of the governmental entities are in serious trouble and are able to meet their financial obligations. The state of Missouri is in good financial health.
The White House has indicated there will be no bailout of Detroit. The federal government did enough for Detroit in bailing out the automobile industry. The bankruptcy by Detroit is the country’s largest ever for a municipality. Detroit is the country’s 18th largest city.
According to published reports, Detroit has 20,000 former workers drawing pensions. That’s a heavy financial load. A huge legal battle looms over cuts to workers, cuts to service, employee benefits, and which bond holders will share and to what extent in what’s left of the city treasury. Can the city emerge to safe ground from a reorganization plan that will result from bankruptcy? That’s the $18 billion question!
Responsibility for the city’s sorry state goes back to its leaders for decades. They must have known that conditions were getting worse and worse yet the spending continued. The crisis in the automobile industry certainly had much to do with Detroit’s decline. Its urban decay has been building for many years.
There’s a lesson to be learned from Detroit. We hope all governmental leaders are paying attention to their management of finances.