Report: Detroit bankruptcy caused by state cuts, shrinking tax base, not long-term debt | Detroit Free Press | freep.com

While we wait for the federal judge to rule on Detroit’s petition for bankruptcy, a Demos report enters the fray:

WASHINGTON — A New York-based think tank released a report today questioning Detroit Emergency Manager Kevyn Orr’s assertion that the city’s long-term debt is responsible for its fiscal problems, or that pension contributions are at major hurdle for the city’s finances.

Instead, the report by Wallace Turbeville, a senior fellow at Demos, a public policy organization, said Detroit’s decline into bankruptcy was caused by a steep decline in revenues partially due both to a shrinking tax base and deep cuts in state revenue sharing with the city.

“By cutting revenue sharing with the city, the state effectively reduced its own budget challenges on the backs of the taxpayers of Detroit,” Turbeville wrote. “These cuts account for nearly a third of the city’s revenue losses between (fiscal year) 2011 and FY 2013. … Furthermore, the Legislature placed strict limits on the city’s ability to raise revenue itself to offset these losses.”

It says a lot about what’s at stake in Detroit that Demos, an organization committed to reducing political and economic inequality, chose to question the factors that have been blamed for Detroit’s struggles for decades, but especially in the past few years: unions and an “addiction to debt” (Orr’s words). I haven’t had a chance to read the report yet, but I hope it’s able to break some of the conservative grip on the narrative about urban fiscal crisis in Detroit and elsewhere.

Read: Report: Detroit bankruptcy caused by state cuts, shrinking tax base, not long-term debt | Detroit Free Press | freep.com.