Monday, April 5, 2010

Time to Call the Bonds Squad?

Are bonds the temporary answer to Flint's budget woes?

12 comments:

  1. Sorry ... I've been away from Flint for awhile and watching its decline from a relatively safe distance. But:

    "Temporary"? Temporary until ... ???

    1) State takes over;
    2) Google chooses Flint to launch tabletop fusion project for perpetual connectivity, thereby hiring millions of former GM employees ...

    Or ... ?

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  2. The idea is to borrow $13 mil for next-fiscal-year operating funds. I'm not clear on either what happens in the next fiscal year (more borrowing?), or how the debt will be paid back.

    So it's not clear what "temporary" would mean.

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  3. I'm wondering what would change to alter this scenario in the future? If residents and businesses continue to leave the city, tax revenues will not improve. The legacy costs of city retirement and benefits packages might not change too much for 10 to 20 years, meaning the operating budgets will continue to be burdened by these costs. Dramatic increases in taxes doesn't seem feasible in a place like Flint with widespread poverty and joblessness. And services have already been dramatically cut.

    What am I missing that could change this scenario?

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  4. geewhy, exactly!

    What industries are left in Flint? GM was, of course, the golden goose. But I have mixed feelings about its exodus: if you hire a contractor to replace your roof, are you required to employ the workmen permanently? GM came to Flint, turned out a product as long as it was in demand; and when it wasn't, pulled out. Problem was, people just didn't ever believe it was going to happen, and spent more time blaming each other when it did, then investing in the future. (IMO)

    What *is* in demand now? Well, tooling up for the 21st century. There's no reason why Flint can't remake itself into UM north (or invite MSU in, or Central, or who-knows-what).

    And ... a-HEM ... *health care*. Health care and "green energy" are the future.

    Without a destination as a "something-City" (used to be: BUICK CITY of course), then there's no end to the borrowing, and no bottom to the rut.

    "Well-we'll-just-keep-cutting" is not a future. Flint has to find a "buyer." Who's willing to take on that project? Should be everyone on City Council. When the lifeboat's sinking, everybody bails.

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  5. "I'm wondering what would change to alter this scenario in the future?"

    Maybe nothing. Maybe Flint is no longer viable in its present incarnation with its legacy governmental cost structure, weak local economy, very large boundaries, old housing stock and infrastructure, and crime problems.

    Flint and Pontiac have certain economic and sociological similarities. Pontiac currently is under state financial supervision. By means of severe cuts, Pontiac has worked its way back to balanced budgets, but my understanding is that it's not clear whether Pontiac will be able to pay off its accumulated debt in the foreseeable future. There may be no light-at-the-end-of-the-tunnel for them.

    The Land Bank of course has been advocating that Flint would be a more viable city if all of its residents were compressed into roughly 1/3 of its current area, because then the provision of services would be about three times as dense as it is now.

    Finding an immediate way to be able to concentrate Flint's service-provision in a much smaller area is beginning to look to me like the only alternative to state supervision, draconian cuts, and simply doing without police and fire services much of the time.

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  6. The city is constantly looking for free government money to start and implement programs and offset costs. If they gave up that addiction to free easy money. They could focus on privet business. You cant even have a hot dog cart downtown for goodness sakes! The law, the taxes and the lack of attention to the privet sector all together are the main reason Flint will not rise above.

    It should be shameful to accept "free" money. If you cannot convince a real business to invest real money then the project just isn't real. It wont create sustainable jobs or tax revenue for any sufficient length of time.

    Google may seem like a joke of an idea. Maybe it is so funny because it so so obviously impossible to consider. Look at city hall! They wouldn't know the first thing about recruiting a company to come to this city. Look at the Mayor! BAHH ha ha ha! Look at the Governor even! Oh my goodness.. I am about to fall out of my chair laughing! Now that is more funny then the thought of google coming to Flint.

    I left Michigan two months ago. After 4 years of non stop persecution for "driver responsibility fee's". I lived in Flint and worked in Oakland Co. for 8.50 an hour. I got socked with fee's and more fee's and thrown in jail several times for simply driving because i simply had no money to pay the state their draconian fee's!

    It caused me to loose my job. Created turmoil in my family and much depression. I ended up on state food assistance. Finally a very good friend paid my fee's of over 3,500.00. I have left the state and now live in Tennessee. I couldn't be happier. And hey... I can have a hot dog cart downtown Nashville! In FACT.. I DO.. And I am earning a living. Oh.. And no personal state income tax.. Imagine THAT? They are building another 1 billion dollar convention center here.. This state has seen a fraction of the problems Michigan faces.

    I attribute that to the limited amount of government regulation. PLAIN AND SIMPLE..

    Good Luck Flint. I will still visit my home town. I wish all my friends in carriage town good luck fighting the good fight.. But enough was enough for me.

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  7. Toward A Brighter FutureApril 7, 2010 at 1:04 PM

    Flint does not have a huge area for its population. At a mere 34.5 Square Miles, there are many cities, some in Michigan, with a similar size and population. In fact, it would have probably slowed problems if they had annexed like Grand Rapids did around 1960 (to 45 Square Miles from 24.4). Only after annexation did the Grand Rapids area begin to grow considerably faster than Flint.

    Flint needs another visionary benefactor like it had with C. S. Mott.

    For awhile, it looked like suburban growth from Detroit would eventually reach the Flint Area, like so many other large cities have grown. It started to, then the increase in oil prices ruined both economic commuting and our domestic auto industry, along with a cultural bias against domestic autos in the nation as a whole.

    People have to have a reason to be excited about living, and I don't see that happening in Flint or the nation as a whole. The nation is in a blue funk, not just Flint.

    Health care won't grow if it is constrained by federal bureacracy.

    Green technology won't cut it unless it can quickly replace energy sources, and allow for the personal freedom and personal transportation enjoyed in the post WWII era.

    In the meantime, the WORLD will continue to be dependent on carbon based and nuclear energy. And unless some genius quickly figures out a way to create HUGE new energy sources, such as a REAL cold fusion generator, there won't be much motivation for the world to change.

    There should be no artificial restraints on growth, or all this will continue NATIONWIDE.

    And the Universities depend on the private sector to generate revenue, income for the people, and students who can afford them. Universities do not exist in an economic vacuum unless artificially propped up.

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  8. JWilly - Yours seems to be a very succinct synopsis of the basic framework of the problem at hand.

    By extending the logic of exploring ideas associated with economies of scale, it may be worth studying the challenges relevant to the manner in which surrounding municipalities might be cajoled into annexing significantly sized adjacent tracts of city land back into their jurisdictions.

    After considering the costs of implementing this kind of approach, there might remain some tax base incentive, (as well as the perk of in-place infrastructure for re-development potential), for these smaller, and thus more maneuverable, governmental units to strategically carve out manageable sections, that in balance, could tip the scales in their favor.

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  9. This will happen about the same time as the dissoltion of Detroit into surrounding municipalities. Neither side would want it. The city would not tolerate the loss of power, the surrounding communities would not tolerate the increased cost and problems. And can you imagine this happening under the current national admisinstration? The time for such solutions was 50 years ago.

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  10. "it may be worth studying the challenges relevant to the manner in which surrounding municipalities might be cajoled into annexing significantly sized adjacent tracts of city land back into their jurisdictions."

    There are some stumbling blocks. Under state law, townships cannot annex land from cities. Thus Flint, Grand Blanc, Mundy and Genesee Townships would have to incorporate before anything could go forward. That would be expensive, and therefore politically unpopular.

    Also, of course governments have to be able to pay for services provided to territory for which they're responsible. It would take some fancy cajoling to get the surrounding governments to take over areas of Flint that can't generate enough tax revenue to pay for the services they need.

    The only way I think that'd be practical is if the annexed areas were pre-emptied of residents, so that they'd need very few locally-funded services.

    And in any case, state law on annexations requires a favorable vote by the residents of the area to be annexed. That would be an additional hurdle if it wasn't clear that the annexing government couldn't afford to do a better job of service-provision than Flint can.

    In most cases, the areas of Flint that might be annexed have higher crime rates than the adjacent government area. That'd be yet another problem when asking the citizenry of the annexing governmental area to vote for the plan.

    The only obvious annexation possibility would be Flint Township being willing to take back Bishop Airport and the GM Truck Plant complex, which used to be part of Flint Township but were annexed by Flint via some very clever lawyering by Edward Joseph, Flint's City Attorney at the time. Taking advantage of the faulty design of the state annexation law, Mr. Joseph designed boundaries for the annexation area that included only a few homes, and "arrangements" were made for those folks to favor the plan. Thus Flint Township had no legal way to object to having 75% of their then-tax-base snatched. They of course got their revenge when metro Flint's commercial center moved to the Township and parts of the Township became some of metro Flint's most desired residential property, while the City proper began its long social and economic freefall. I reckon the Township would be willing to accept their airport and factories back, though.

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  11. "...Flint, Grand Blanc, Mundy and Genesee Townships..."

    Obviously this list is jacked up in regard to adjacency. The point was, the adjacent townships, whoever they are.

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  12. Burton, along with the townships of Flint, Genesee and Mount Morris are the adjacent municipalities. I personally don't want to live in Flint Township, however. I'm proud to be a Flint resident.

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