I talked with a former elected official this morning who
told me (not for attribution) that he believes the Legislature would be making
a horrible mistake if it approves the $350 million aid package for Detroit
proposed by Gov. Rick Snyder.
If the plan goes through to assist the bankrupt city, the
former official said, mayors would be encouraged in the future to fund only the
basic programs that the public wants, not pension funds. By maintaining quality
public safety, parks and garbage pickup, an official can please his
constituency while dumping multi-million dollar pension problems into the lap
of a future mayor.
Ultimately, based on the Detroit precedent, this
financially devastated city would approach the state for a bailout.
“I would not put any money into my police and fire
pensions,” the former official said. “I would put it toward whatever would get
me re-elected.
“I could misspend all I want and not worry about it.
After all, pensions are just like the water system, nobody sees ’em.”
Now that the Detroit bankruptcy judge has ruled that, in
a Chapter 9 process, labor contracts can be broken even if pensions are
protected by the state Constitution, the game of municipal finance has changed.
Another obvious political factor here is that officials
in many of the cities and townships that were shortchanged by a total of $6
billion in revenue sharing funds over the past several years will be fuming if
the Detroit plan passes.
They have been on the front lines, making cuts, laying
off employees, burdening their existing workforce through attrition that thins
the ranks and, in some cases, raising taxes. As this debate heats up, they will
clearly contrast their record of fiscal management and tough decisions with the
city of Detroit, where decades of gross mismanagement was instrumental in
Motown hitting rock bottom.

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