I was the first emergency financial manager in Pontiac from March 19, 2009 through June 30, 2010 and I believe my experiences could be very applicable to Detroit. I know that, even though I have been a turnaround consultant for over 20 years, I learned a tremendous amount from actually going through the process.
We made some mistakes but we also achieved many successes as a result of listening to the city's staff personnel, respecting their expertise, encouraging new ideas and then enlisting their support to take action and implement the changes.
We didn't just create more reports or studies that went on someone's shelf. We were able to generate, even under the old Public Act 72, over $115 million in multi-year benefits for the city, upgrade the city's bond rating and generate two years of surpluses in a row after many years of deficits.
Virtually all the recent discussions about Detroit have focused on how much power either the mayor, the city council or an emergency manager could bring to bear to cut costs immediately. It is true that in a financial emergency the only controllable factor initially is expense so that must be addressed first. But cutting expense alone is overly simplistic and shortsighted. To be successful, Detroit must cut expense and increase its revenues. The major sources of city revenues are from property taxes and income taxes. These will increase only if more people and businesses, who are able to pay taxes, live or work in the city.
Detroit must have a plan to cut expense without drastically reducing services and to attract taxpayers to the city. Creativity and teamwork on the part of all stakeholders involved will be absolutely essential if Detroit is to both cut expense and attract major new taxpayers who are being courted by virtually every other community in the country. Detroit must compete for these taxpayers with a clear-cut turnaround plan.
The first step in the turnaround planning process is to stop all forms of denial. This is not to criticize or blame, but to understand the depth of what must be done. [Nobody should assume that any one person will be given a magic wand to cure-all Detroit's problems quickly.] Just a few statistics can help to begin the process to understand Detroit's competitive position and that its resources already are severely limited. For example, Detroit is now only the 18th largest city in the country based on 2010 data from the U.S. Census Bureau.
It is no longer in the top 10. Detroit also was ranked 522, of 540 cities listed by the U.S. Census Bureau based on per capita income of $14,213 (based on 2009 data). For comparison purposes, per capita income of Dallas, the 200th highest city, was $25,941, 82 percent above the level of Detroit. Detroit also had the lowest per capita income and the second highest level of individuals in poverty (at 36.4 percent, only better than San Juan, Puerto Rico) of the 50 largest cities in the U.S. (based on 2009 data). Despite these statistics, Detroit needs at least tens of thousands of additional people and/or businesses who can pay taxes.
We are now very late in the timeline to be able to be successful. Detroit cannot wait any longer to pull together and implement programs such as Detroit Works in order to increase the quality of services at a lower cost to a more concentrated community. If additional precious time is lost through continued infighting and tax revenues continue to decrease, the city's downward spiral will speed up and the city will never be able to cut its way to success. On the other hand, if the city, the county, the region, the state and the federal government have a workable and attractive plan for the future and pull together, Detroit can be great again.
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