Washington Post Looks at Why Detroit, Flint Rely So Heavily on Private Money

November 27, 2018, 7:35 AM


Cities around the nation sometimes rely on private money from corporations and foundations to address problems created by public policy.

But perhaps no where is it more prevalent than in Michigan in places like Detroit and Flint, according to The Washington Post by Sarah Reckhow an associate professor of political science at Michigan State University. Davia Downey,  an associate professor of public administration at Grand Valley State University and Joshua Sapotichne, an associate professor of political science at MSU. 

The article says: 

Both Detroit and Flint have been relying on private generosity to address public problems since high-profile crises — Detroit’s 2013 municipal bankruptcy and the Flint water crisis. In Detroit, 12 foundations promised more than $300 million for the “Grand Bargain,” which salvaged the Detroit Institute of Arts and the city’s pensions plans. Immediately after the Flint water crisis, 10 foundations created a pool of more than $125 million for recovery.

Our research shows how Michigan policies sharply limit local governments’ and school districts’ ability to pay for infrastructure, personnel and other basic functions, creating a strong incentive for local officials to seek private funding. As we explain below, these pressures are present in many states but intensified in Michigan.

State legislatures and governors have extraordinary influence over what local governments can and cannot do. Every U.S. state has limited local governments’ revenues, through a variety of measures. Many have passed tax and expenditure limits that limit property tax increases, require voter referendums for new taxes or limit tax rates. State policies on pensions and employee health care also affect local labor costs. For example, in California, state court decisions have sharply limited local efforts to reform costly public employee pension systems.

Michigan policy strictly limits local governments’ revenue options by reducing the amount of state revenue shared with local governments and maintaining high public employee costs through pension and health-care obligations. Moreover, Michigan cities have faced the consequences of economic decline, including deindustrialization, population loss and sharp reductions in property values.

Read more:  The Washington Post

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