Tuesday, September 17, 2013

How Detroit went Broke

This is much more helpful than the typical "auto industry and unions killed Detroit" intellectual laziness.  The Detroit Free Press dug into the history of the city's finances and put together some terrific infographics, as such:

In general, it's a story of diminishing tax base (population + wages) during periods of increased cost burdens (infrastructure + pensions) and the sum total of many attempts to paper over the cracks with increased fees, revenue sources, and symbols of progress, none of which actually addressed the underlying issue of population loss which was the real key.

The key points:

  • City debt actually dropped below revenue during the late 1970's/early '80's.  

  • Detroit had pretty significant debts back in the 1950's when the population was at its peak
  • Absurd pension payments are still a prob, obv.
  • Debts REALLY spiked in the late 1990's when the state drastically reduced state-wide tax revenue sharing.
  • Oh, and then there is Kwame Kilpatrick's pension refinancing which was lauded at the time, but turned out to double the city's burden, while in all likelihood landing him in jail.  More jail.  On top of what he's already in.