(Corrects figure in fourth paragraph under ‘Getting as Pass’ subhead in story originally published Dec. 7.)
Dec. 7 (Bloomberg) -- The law that threatens Detroit with direct state rule may be repealed through a petition drive powered by unions and residents opposed to white control of a city that’s 82 percent black.
“It’s nothing but a takeover bill,” said Brandon Jessup, chairman of the Stand Up for Democracy coalition seeking 161,300 signatures to place the measure on the November ballot. “This is definitely a race issue. It’s affecting people of color not only in this generation but future generations.”
Detroit has the highest concentration of blacks among U.S. cities with more than 100,000 residents, according to U.S. Census Bureau data. It will exhaust its cash by April and may run up a deficit topping $200 million by June.
Last week, Governor Rick Snyder, a white Republican, ordered a review that may lead to appointment of an emergency manager, rekindling rancor in a city scarred by race riots in 1967. Detroit lost one-quarter of its population since 2000 -- much of it to largely white suburbs.
Four Michigan cities are controlled by emergency managers. All have populations that are mostly black. If Detroit joins them, 49.7 percent of the state’s black residents would live under city governments in which they have little say.
Michigan’s emergency managers have sweeping authority to nullify union contracts, sell assets and fire workers. Snyder has said he doesn’t want one for Detroit, though he called the city’s financial condition severe enough to warrant help.
Do It Yourself
“I view an emergency manager as a situation I want to avoid,” the governor said yesterday in an interview at the Capitol in Lansing. “I’m really supportive of the mayor and council coming up with solutions that will structurally solve these problems.”
Emergency managers’ autocratic power, under a law passed in March, galvanized labor unions and home-rule advocates. If opponents get the repeal question on the ballot, the measure would be suspended until voters decide to keep it or scrap it. It also is being challenged in court.
“Detroit needs to be run by Detroiters,” Mayor Dave Bing, a black Democrat, said last week at a press conference the day before Snyder called for the review.
Councilwoman JoAnn Watson compared the city’s resistance to Rosa Parks’ refusal to move to the back of a bus, an act that began the Montgomery boycott in 1955 and a civil-rights watershed.
Councilman Kwame Kenyatta said an emergency manager would be “a master, as someone to control the plantation,” according to the Detroit Free Press.
On Dec. 1, U.S. Representative John Conyers, a Detroit Democrat, wrote a letter asking U.S. Attorney General Eric Holder to investigate. Michigan’s law discriminates against cities with many blacks, he said. An emergency manager for Detroit, he wrote, “would be perpetuating the discrimination on an even more egregious scale.”
Snyder said the four cities came under state control due to financial facts, not the complexion of their populations.
“We’re just doing our fiduciary duty, representing the citizens of the state,” Snyder said. “It’s not about emotional, subjective things.”
Emotion, however, may derail his effort in Detroit.
George Galster, 63, a professor of urban affairs at Wayne State University in Detroit, said the racial divide there is the deepest of any major U.S. city. Armed troops quelled riots there in 1836, 1863, 1943 and 1967, he said.
“This town has been steeped in racial hatred for so long, white folks and black folks have a real hard time cooperating,” Galster said.
Detroit’s white flight began in the 1950s as auto companies and suppliers closed and suburban housing opened up, he said. A 1967 riot brought 43 deaths and required the intervention of the National Guard and regular Army troops.
The city’s population loss and concentration of poverty results from the state’s giving suburbs unchecked control over land use, which promoted sprawl, Galster said.
Detroit is familiar with takeovers. In 1999, the state assumed power over the city’s schools under then-Governor John Engler, igniting charges of racism from Detroiters who disrupted a state Senate committee. Fearing violence, police set up metal detectors in the Capitol for gallery spectators before the final vote.
The schools reverted to an elected local board in 2005, and were placed under an emergency manager in 2009 by Democratic Governor Jennifer Granholm. Both Engler and Granholm are white.
Getting a Pass
The fight reveals divisions in a state hit hard by the 18-month recession that ended in June 2009. Michigan lost 860,000 jobs from 2000 to 2009, due largely to the near-collapse of the U.S. auto industry.
While the state has taken over majority-black Flint, Pontiac, Benton Harbor and Ecorse, and is reviewing Inkster, it hasn’t been as aggressive in mostly white Allen Park and Jackson, said Jessup, 30.
Neither of the latter warranted action because both had plans to address financial difficulties, Terry Stanton, a Treasury Department spokesman, said in an e-mail.
Treasurer Andy Dillon, in a Dec. 2 memo to Snyder, cited Detroit’s below-investment-grade bond ratings -- BB by Standard & Poor’s and BB- by Fitch Ratings -- and long-term debt of more than $10 billion, with no plan to reduce it, as reasons for a review.
Jessup called the emergency manager law, Public Act 4, a “radical attempt” to create crises as a way to attack employee unions and hand municipal services to private companies. The petition drive will collect enough signatures by the end of December, he said.
Little to Tax
An emergency manager wouldn’t solve Detroit’s fundamental problem, said Robert Kleine, treasurer under Granholm. The city is hobbled, he said, by lack of revenue from the state and an increasingly poor populace.
“You get to the point where you can’t cut any more without destroying the quality of life,” said Kleine, 70.
Louis Schimmel, emergency manager for Pontiac, north of Detroit, said repealing the law would wreak havoc on hopelessly indebted cities that need someone to keep them from bankruptcy.
Schimmel said other municipalities will need state action.
“There may be half a dozen more,” said Schimmel, 74, a former receiver in two cities. “I don’t think we’ll have 25 of them.”
Even those that stay out of trouble may be harmed by their neighbor’s travails.
Farmington Hills, a Detroit suburb of almost 80,000, weathered the recession better than many others, said City Manager Steve Brock. He ascribed its success to budget cuts, a tax base balanced between residential and commercial property, and a population wealthier than Michigan as a whole.
Brock, 51, said he’s concerned about Detroit, both as a municipal official and a neighbor. He said a dysfunctional urban core affects the entire area.
“I’m kind of a student of this, and I think it’s going to bear mightily on what happens in our region and our state,” Brock said.
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