News Story

WSU Prof's Report Blaming Flint Decline on 'Structural Racism' Used Bad Data

City and state audits contradict report's obsolete, speculative source

A Wayne State University professor who blamed the Flint water crisis on “structural racism” and a decline in state revenue sharing based his assertions in part on an incorrect estimate from an outdated revenue projection. Audited financial reports from the state of Michigan and city of Flint showing actual revenue collections contradict the professor’s source.

Law professor Peter Hammer released a report claiming that state revenue sharing payments to Flint declined from $20 million in 2006 to $7.9 million in 2012. But both city and state financial statements indicate this statement was inaccurate and that Hammer’s overall report understated Flint’s revenue by more than $5 million.

According to these official sources, the city of Flint received $19.5 million in state revenue sharing payments in 2006 and $13.1 million in 2012.

Both the Detroit Free Press and Michigan Radio ran stories on Hammer’s conclusions despite the incorrect figures.

Hammer said in an email he got his information from a 2011 Michigan State University study containing estimates of the amount of future state revenue sharing money Flint would receive.

In Hammer’s July 18, 2016, report he wrote, “The primary, non-structural reason Flint was in financial distress was the direct result of state revenue sharing policy. This fact does not get the public attention it deserves.”

But Flint’s financial reports show that revenue sharing changes had comparatively less impact than other financial challenges. For example, from 2006 to 2012, Flint’s annual city property tax collections declined by $10.6 million. Its annual revenue from a city income tax fell also, by $5.4 million. Combined, those two revenue sources fell by $16.0 million those six years, compared to a $6.4 million decline in state revenue sharing money.

“Your data suggests a still significant decline, but of a smaller magnitude,” Hammer said in an email. “The report I wrote examines the interaction of structural and strategic racism in the Flint crisis. I claim that structural racism, including the collapse of property and job markets, and non-structural causes, the reduction in revenue sharing, contributed to the financial crisis leading to Emergency Management.”

Flint’s overall tax revenues declined from $72.8 million in 2006 to $44.3 million in 2012. Declines in state revenue sharing payments accounted for only 14 percent of the city’s decline in annual revenue over those six years.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.