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Detroit’s Fiscal Budget: A Case Study in Corporate Domination

With a shrinking population and persistent poverty, the bank-led city administration ignores public sentiment in favor of capital

Detroit _ Property Tax demonstration
Detroit demonstration during March 2015 to halt property tax foreclosures

By Abayomi Azikiwe

Editor, Pan-African News Wire

Analytical Review

A recent debate over the fiscal budget for 2022-2023 for the City of Detroit revealed the political character of the current administration and City Council.

The budget was approved for $2.4 billion in a municipality where a majority of the population are African American, working class and impoverished.

There were efforts by grassroots community organizations to influence the entire budget process. The Moratorium NOW! Coalition (MNC) in a public letter urged the City Council to include a $1400 “booster” check to retired municipal employees impacted by the more than 8% rate of inflation in the United States. In addition, to the booster campaign for retirees, the MNC in another correspondence to the City Council, demanded that the budget presented by the white corporate-imposed Mayor Mike Duggan be rejected due to its lack of consideration for the 80% African American population in Detroit.

However, even with the advent of six new Council members who ran on a platform calling for greater attention to be paid to the workers and impoverished in the city, the final product prioritizes the less than one percent of absentee capitalist corporations and banks which through the legislative and administrative process, deliberately expropriates the tax wealth of the people in Detroit.

Tax Increment Financing (TIF), which is utilized around the U.S. in municipalities to provide incentives for corporations to locate in urban areas, remains a major source of underdevelopment for the people of the city and the entire southeastern Michigan region. In fact, it is the denial of public revenue for education, municipal services, housing, environmental justice, water and other essentials needed within a modern society, which lies at the heart of the instability facing the more than 635,000 residents of the city. (https://urban-regeneration.worldbank.org/node/17)

Within the state of Michigan, the TIF process is closely related to Tax Captures. These measures have looted millions of dollars from the public school system, the libraries across the city as well as municipal services. Adding to this State of Michigan regulated system of appropriation of the tax revenue of working people, the American Rescue Plan (ARP) monies allocated by the current administration of President Joe Biden, are being utilized to bolster funding for the police along with other prestige projects designed to bring whites into the city as investors, tourists and residents. (https://semcog.org/blog/using-tax-capture-programs-for-economic-development)

In the April 7 letter to the Detroit City Council, the MNC says of the now passed municipal budget that: “In regard to the City of Detroit Proposed Budget for Fiscal Year 2022-2023, the Moratorium Now Coalition finds the mayor’s proposed budget unacceptable. The proposed budget of $2,453,276,906 in a city with a poverty rate of 35.02% and a reported unemployment rate of 9% should have more funds going directly to the community for services and programs that would improve the quality of life.” (https://moratorium-mi.org/letter-to-detroits-city-council/)

Since the enactment of the illegal emergency management and bankruptcy regime of 2012-2014, Detroit through a carefully calculated bank-led propaganda and psychological warfare campaign has been projected as a municipality undergoing an urban renewal. Nonetheless, the much-promised relief from financial institutions to assist in rebuilding the city has not materialized. What has remained constant is the continuing socioeconomic impact of tax captures compounded by the systematic neglect of community organizations which oppose the exploitative agenda of the Duggan administration.

The MNC put forward a list of priorities in the same above-mentioned letter to the Detroit City Council on April 7. This document drafted through weeks of discussions and debates within the ranks of the organization denounces: “A transportation budget increase of $4M with no additional driver’s positions added. The 19 new positions the mayor has boasted about adds 10 management positions and 9 in support service. Bus drivers need to make a decent wage and we need additional drivers and more positions to service the buses. The Health Department budget is almost nonexistent. The proposed budget of $44M is comprised of $33M of grant funds and $10M from the general fund. Detroit is a city in a mental health crisis with only $679,000 of the $44M budgeted for community health services. Residents are demanding a safer community and our mayor’s only solution to address this issue is to increase the police budget. This is unacceptable. Detroiters need the Health Department budget increased. We need quality mental health services available to all in need. We don’t need more funding for the police department. We believe that if our city addresses our mental health crisis and poverty then our city becomes safer. When people’s needs are met, crime decreases.” 

The law-enforcement apparatus in Detroit has a long and sordid history of racism and brutality towards the majority Black population. Not only does the police receive the largest proportion of the annual budget they have been awarded with an additional $50 million from the ARP funds supplied by the federal government. In addition, a $2,000 bonus was provided to the police to keep them from leaving the City of Detroit to join other law-enforcement agencies in the state or country. 

There are pending lawsuits filed by antiracist activists who were viciously brutalized while demonstrating during the summer of 2022 in the aftermath of the police executions of George Floyd in Minneapolis and Hakim Littleton in Detroit. Instead of addressing the deeply entrenched racist and brutal culture of the police, the Duggan law department has so far failed in its attempt to countersue the Detroit Will Breathe youth-led movement. Leading DWB activists are continuing to be harassed by police agencies in Detroit and Shelby Township, located in Macomb County.

The Need for Expanding the Fightback Movement

These developments in Detroit represent a microcosm of the U.S. as a whole. There is an inflation rate of more than 8% not witnessed in more than four decades. At the same time, the Biden administration has provoked a conventional war with Russia over the expansion of the North Atlantic Treaty Organization (NATO) further into Eastern Europe. 

The foreign policy questions are having a profound impact on the domestic situation. The rapid rise in food, energy, housing, and other commodity prices in the U.S. and throughout the international community is a direct response to the uncertainty prompted by the war in Ukraine and the failure of the capitalist states to effectively address the economic crises spawned by the COVID-19 pandemic. 

In Detroit, like other municipalities, the residents from the working class contribute to the public coffers far in excess of what is received as it relates to services and political considerations. Another prime example in the failure of the City to take seriously the redevelopment of Detroit, there was $600 million in property over taxation starting with the financial crisis of the 2000s and continuing to the present, during which there were tens of thousands of foreclosures. The decline in housing stock in Detroit is a direct result of the predatory and racist lending practices of the financial institutions. The exorbitant interest rates and fees in the housing sector are mirrored in the municipal fiscal construct.

These same usurious terms of credit which destroyed the neighborhoods of Detroit were also imposed on the municipal government. The imposition of emergency management and bankruptcy in part was a logical extension of the expropriation by the banks of the resources of the people of the city. Belle Isle, the Detroit Institute of Arts (DIA), Detroit Historical Museum, Detroit Zoo, Detroit Public Works, Detroit Public Lighting, were restructured to disempowerment the majority African American and working class residents. 

This phenomenon of over taxation has become a major issue in the city. However, the corporate-driven administration and City Council continues to claim that although it is prohibited according to state law to engage in a deliberate process of over taxation, it would be illegal to reimburse those who were robbed by the city administration at the aegis of the banks.

All of these community struggles require a unified movement to fightback against the further corporatization of municipal governance. Lessons are to be learned from previous campaigns that challenged the dictatorship of capital over the lives of the people. There needs to be a renewed emphasis on community control of the police, private investments and the overall operations of municipal governance. Only under these conditions will there be a qualitative change in the conditions of working and oppressed peoples in Detroit and around the U.S.

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