A news service for the people of Michigan from the Mackinac Center for Public Policy

In June 2009, the city of Detroit's unrestricted deficit had nearly doubled from the previous year, increasing from $501.3 million to $920.2 million, according to the city's financial audit. 

The state Legislature responded by approving a bill about six months later that doubled Detroit's ability to finance more debt. 

Sen. Young

At the time, Mackinac Center Senior Legislative Analyst Jack McHugh wrote a blog titled, "Is Another Credit Card the Solution to Detroit's Spending Problem?"

State Sen. Coleman Young II, D-Detroit, evidently thought the extra borrowing option was a good one because as a then-state representative, he became a sponsor of House Bill 5626 in 2009. Then-Gov. Jennifer Granholm signed the bill in February 2010 and Detroit's ability to finance debt via bonds doubled to $250 million.

Five years later, Detroit's spiral to bankruptcy has been well chronicled and there were few serious attempts to fix the structural problems that have plagued the city for decades. City officials and many in the Legislature resisted potential solutions such as selling even a single piece of art, privatizing services or selling the city's water and sewerage department. 

Instead, the Legislature passed another deal where Michigan taxpayers would bailout the city of Detroit for $195 million. 

Five years later, Sen. Young had harsh words for those who allowed the city to go into more debt. Except, he wasn't blaming his fellow legislators, but "shady bankers."

"Yes, the collection of the Detroit Institute of Arts will not be sold off to pay shady bankers who made loans to a city who know they couldn't afford it — the definition of predatory lending," Young said after the bailout was finalized by the Legislature.

McHugh said the Legislature isn't free and clear of blame.

"If the lenders were 'shady' and 'predatory' then what does that make the 75 House and 30 Senate members — including then-Rep. Coleman Young II — who voted in 2010 to double how much Detroit could borrow to cover current expenses and paper over its overspending a little longer?" McHugh said, also noting that Rep. Young cosponsored the bill. "Members of the Detroit political establishment blaming lenders for the city's fiscal malpractice is like someone with a gambling problem blaming the ATM machine for delivering cash to buy more lottery tickets."

Sen. Young did not respond to requests for comment. 

~~~~~

See also:

Special Deals Allow Detroit To Collect Hundreds of Millions In Extra Revenue

The Winners and Losers In Detroit Bankruptcy

Agenda For Detroit: What Role State Government Should Play After Bankruptcy

Detroit Should Look to Pontiac

Michigan Taxpayers Have Already Bailed Out Detroit

More Money, Higher Taxes Not the Solution for Detroit

Detroit Still Sending Tax Notices 15 Years After Company Closed

Is the Problem In Detroit Really a Lack Of Revenue?

Northern Michigan University economist Hugo Eyzaguirre discusses how raising the minimum wage will hurt emerging local economies. See more at "Raising the Minimum Wage, Lowering Opportunity."


Most Popular