The Story of Detroit’s Bankruptcy: A “Takeover” or an Inevitable Financial Crisis?

Detroit is approaching its one-year anniversary of emerging from the nation’s largest-ever municipal bankruptcy, and the city has changed. Perhaps nowhere is that difference more apparent than in the roles of, and the relationship between, Detroit’s elected leadership.

It’s been a long path to that change.

During the spring of 2012, more than a year before Detroit filed for Chapter 9 bankruptcy protection, a crowd packed a room in the state government building called Cadillac Place in the city’s New Center neighborhood. The state’s Financial Review Team was meeting regularly, deciding, in part, whether the city’s elected officials could prevent insolvency with a reasonable financial plan.

Activists like Sandra Hines said Michigan Gov. Rick Snyder was staging a takeover, characterizing it as the suppression of democracy in Detroit.

“You don’t have the right to come in and take our city from us and tell us what to do,” Hines told the flock of state officials assembled. “I’m so tired of being in war mode.”

Hines turned to the group of activists standing behind her in that room. “This is a war y’all,”she said. “They have literally declared war on us. And we are assembling our troops to fight you back!”

Some Detroiters — and many media outlets — began criticizing the democratically elected leadership for failing to stave-off bankruptcy. The Detroit City Council, in particular, was blasted as an ineffectual group that just did not play together well.

Some Detroiters say the mere mention of City Council conjures images of a highly-publicized argument between former Council President Ken Cockrel Jr. and then-Council President Pro Tem Monica Conyers, where she informed Cockrel he was “not her daddy” and derisively compared him to the movie ogre Shrek.

It was one of a number of fights Council had over the decades between themselves and various mayoral administrations that characterized the dysfunction many blame, at least in part, for the city’s fiscal crisis.

Council, which controlled the city’s coffers, battled with former Detroit Mayor Dave Bing over potential budget cuts during much of his tenure. Or at least members did so until they suddenly fell into lockstep with the Mayor shortly before Snyder appointed Emergency Manager Kevyn Orr in March 2013 to control the city’s finances.

By then, Bing told Detroiters during a televised news conference, it was too late to forestall bankruptcy.

“I really didn’t want to go in this direction. But now that we are here we have to make the best of it. This is very difficult for all of us. But if it’s going to make the citizens better off then this is a new start for us,” Bing said at the time.

Council members, however, complained that it did not have to be that way.

Former Councilman Gary Brown said they could cut enough across all city departments to keep Detroit solvent while searching for long-term solutions. But he had predicted neither the Bing Administration nor the state would go for it.

“Yeah it was frustrating,” Brown said. “And frustrating enough that I went and asked Kevyn Orr if he would hire me and allow me to implement some of the plans that were on the table while we had an emergency manager in place. Because it gave the city some powers that it wouldn’t have had in a more democratic state. We didn’t have to adhere strictly to union contracts and a lot of the charter was set aside that allowed us to move a lot faster than we would have otherwise.”

Brown became Detroit’s chief compliance officer, and he now heads the retail division of the city’s water department.

Recalling his time on council, pre-bankruptcy, Brown says the city simply had no money to work with until the case helped rid Detroit of some debt.

”Every city department was fundamentally broken when it came to delivering services. And the bankruptcy allowed us to build a financial base to fix city government so that it can deliver a high level of service. And now that we have a mayor that is, through metrics every week, measuring what’s getting done, the city has never looked better in terms of being a clean city again,” Brown says. “And the service that’s being delivered is certainly not where we want it to be. But it’s so much better than it was and it’s improving every day.”

For their part, state officials now watching over Detroit’s finances say they’re pleased with the progress shown so far by current Mayor Mike Duggan’s administration.

Bill Martin, vice chair of the Financial Review Commission that has final say over Detroit’s fiscal decisions as part of the bankruptcy settlement, says he has “no concerns, because they’re all on top of it. And we’re all on top of them to make certain they get it done.”

Standing in the same room at Cadillac Place where activists once decried the demise of democracy in Detroit, Martin says the city now faces a rocky, but achievable, path.

“Do I expect that it’s going to be perfect going forward? No. Because there are so many challenges as we address problems of crime and safety (and) blight. So I always like to say look, you’re not gonna hit grand slam home runs here in this first year. You’re gonna hit bunt singles. And I think the Mayor and his staff are doing that,” Martin says.