Discuss Detroit Archives - Beginning January 2007 Detroit deficit at $163 million Previous Next
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Irvine_laird
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Username: Irvine_laird

Post Number: 4
Registered: 02-2007
Posted on Friday, March 09, 2007 - 3:10 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Detroit's deficit: $163 million
March 9, 2007

By ZACAHRY GORCHOW

FREE PRESS STAFF WRITER

Detroit ended its 2005-06 fiscal year with a deficit of $163 million -- $96 million worse than projected.

While $67 million of the deficit was expected and budgeted for in the 2006-07 fiscal year, the administration of Detroit Mayor Kwame Kilpatrick will now need to assemble a plan to wipe out the additional $96 million over no longer than a five-year period.

http://www.freep.com/apps/pbcs .dll/article?AID=/20070309/NEW S01/70309032
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Livernoisyard
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Username: Livernoisyard

Post Number: 2722
Registered: 10-2004
Posted on Friday, March 09, 2007 - 3:13 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

What was it last year? $135 million? KK earlier said Detroit would be in the black this year. He probably goes by a different meaning of "black."
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Chub
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Username: Chub

Post Number: 465
Registered: 11-2003
Posted on Friday, March 09, 2007 - 3:43 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Not surprised at all.
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Lmichigan
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Username: Lmichigan

Post Number: 5190
Registered: 10-2003
Posted on Friday, March 09, 2007 - 4:06 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

The city isn't going to even have a chance to get out of this hole until it comes to agreements with employee benefits both those employed and retired. I can't imagine how much they are draining the city budget. It may be the employees perogative to fight for their benefits, but it's the cities perogative to get this defeciet under control, and it will have to include cutting and stopping some benefits.

(Message edited by lmichigan on March 09, 2007)
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Ladyinabag
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Username: Ladyinabag

Post Number: 56
Registered: 03-2007
Posted on Friday, March 09, 2007 - 4:15 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Well, here are all of your "professionals" running the city.
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Irvine_laird
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Username: Irvine_laird

Post Number: 5
Registered: 02-2007
Posted on Friday, March 09, 2007 - 4:29 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

My knowledge of Detroit's financial crisis is shallow at best. Where can I go to learn more about the root of the problem? What is the best source of balanced information about the city's budget crisis?
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Emu_steve
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Username: Emu_steve

Post Number: 171
Registered: 11-2006
Posted on Friday, March 09, 2007 - 7:03 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Let me ask the question this way:

Is it possible for Detroit to grow its way out of the deficit?

What I mean is it possible for the revenues to rise quick enough to close the gap?

How much can Detroit grow its revenues fiscal year over fiscal year?

What is the percentage of the budget deficit to the total budget?
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Livernoisyard
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Username: Livernoisyard

Post Number: 2728
Registered: 10-2004
Posted on Friday, March 09, 2007 - 7:11 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Detroit already owes more than $2 billion in long-term bonds and KK wants to borrow another $1 billion, according to an unsubstantiated story. I hope that's not true.

Because Detroit is in technical violation of state laws due to its not reporting adequately its financial position, Detroit must get state approval for almost any major borrowing. It's essentially a prelude to eventual bankruptcy.

(Message edited by LivernoisYard on March 09, 2007)
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Charlottepaul
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Username: Charlottepaul

Post Number: 644
Registered: 10-2006
Posted on Friday, March 09, 2007 - 8:22 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

"Is it possible for Detroit to grow its way out of the deficit?"

Emu_steve, that is the model for conducting most business in the world of economics. Often times cities don't borrow money except for infrastructure type projects. However, It does make sense to borrow money, invest it (in this case in the city of detroit), with the expectation that it will pay for itself as well as provide additional returns. The City of Detroit is NOT going to keep going down the slope until there is nothing left. In fact, I believe Detroit has already reached bottom, and that within the last year or two, things are leveling out. If that is the case, it essentially has no where to go but up. If you bought a stock with a value of $ 1.00, the worst the could happen would be that it would stay the same. More than likely however it is going to go up at some point, maybe slowly, maybe quickly.
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Lmichigan
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Username: Lmichigan

Post Number: 5192
Registered: 10-2003
Posted on Friday, March 09, 2007 - 8:59 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

How much of Detroit's budget is made up of property taxes, again? As long as the city is losing around a 1,000 people per month, and not replacing this with businesses to offset this loss, there is no way it's going grow its way out of the problem, if that's what you're talking about.

Also, simply because of the size of the government, there is no way the city can ever get ahead of this population loss curve. It's only hope it to somehow try and stop the bleeding. What's worse, both SEMCOG and Census Estimates already predict the population loss over the decade, thus far, is faster than the population loss of the 90's, so the idea that it has slowed down doesn't have much weight. I was so optimistic at the beginning of the decade that we'd seen the worse concerning the population loss, but that's not turning out to be the case.

The fact is, Detroit's going to be cutting government and services every single year unless the population loss is addressed head on. I thought the city would never fall below 900,000, this decade, but if trends continue, it will hit 820,000 or so by 2010. The problem is really that urgent. This isn't a yearly problem, this is a monthly problem. Every single month you have an increasingly poor city paying for the same infastructure built for a population of around 2 million. There is no way the city can cut its way to success, alone.

(Message edited by lmichigan on March 09, 2007)
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Charlottepaul
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Username: Charlottepaul

Post Number: 647
Registered: 10-2006
Posted on Friday, March 09, 2007 - 9:44 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Lmichigan, while I will agree with you about population and what not, that is only part of the equation (how much I am not sure). The city is not really investing in trying to increase its population (it will never be as large as the auto industries over-inflated it decades ago at its peak), so you really can't argue that the city's current investments aren't paying off. Instead they have redone the streetscapes downtown for example. The return on that investment won't be an increasing population, but rather new businesses and more money spent in the city. See where I am going with this? Basically, it isn't as simple as pointing to the population and saying things are going up or down, and that means that the city is getting more into deficit or not.
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Lmichigan
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Username: Lmichigan

Post Number: 5193
Registered: 10-2003
Posted on Friday, March 09, 2007 - 10:14 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

The less people there are, the less tax money the city will be able to pump into things like downtown redevelopment. And, for every new downtown business (many of which don't last more than a couple of years to begin with), you've lost many more in the neighborhoods. Everything boils down to population and success or failure in retaining and growing businesses in the city. Let's not pretend a new streetscape downtown is solving much of anything. What's currently happening within the city, itself, is what I call a game of "musical houses." It's simply redistributing a shrinking population. It'd be different if the taxes being loss from those that move from the city were being replaced even almost equally by new businesses coming in, but that's not even the case. Sorry to tell you, but the fact that downtown/central Detroit is better of than a few years ago does not mean that the rest of the city is. In fact, that's not the case, at all.

(Message edited by lmichigan on March 09, 2007)
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Mike_from_gregory
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Username: Mike_from_gregory

Post Number: 6
Registered: 02-2007
Posted on Saturday, March 10, 2007 - 2:58 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

I can still hear Coleman saying: DETROIT NEEDS CASINO GAMBLING. I havent been in Detroit in years even though I grew up there. I go to Vegas once a year and grow their economy. If the city is counting on gambling as an industry the city is and in my opinion dead a long long time ago......
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Lmichigan
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Username: Lmichigan

Post Number: 5194
Registered: 10-2003
Posted on Saturday, March 10, 2007 - 3:20 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

I'm just waiting for the same naysayers to attack the proposal Kilpatrick has recently laid out which concerns lowering income and property tax.
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Detroiterinspirit
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Username: Detroiterinspirit

Post Number: 33
Registered: 01-2005
Posted on Saturday, March 10, 2007 - 3:28 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

I'll be the naysayer. We should blindly believe that King Kwame's proposal will work -- because everything else he has done with his finacially planning has worked perfectly.

Instead of "Fire Millen" as a tag line, I'm starting "Detroit - Receivership!".

Don't be surprised if $165M is not the real number.
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Livernoisyard
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Username: Livernoisyard

Post Number: 2732
Registered: 10-2004
Posted on Saturday, March 10, 2007 - 4:16 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Detroit will not improve or bottom out until the city first goes bust. Then, the state will run the city until its financial status recovers sufficiently to allow elected government to resume running things again. Who knows how long this might take. It took Madison WI several decades during the nineteenth Century to recover from its bankruptcy.

The sooner the better this happens because the elected buffoons won't deal with the drastic job cuts necessary and pay/benefit reductions, or to stop the graft.

After a while, if outside people recognize that the state is running the city adequately, hopefully some will move into the city. Only the ill-informed in Detroit believe that the current mayor and the common council are mentally and ethically up to the task.
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Lmichigan
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Username: Lmichigan

Post Number: 5195
Registered: 10-2003
Posted on Saturday, March 10, 2007 - 4:31 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Detroiterinspirit (no, you're not), are we talking about the same thing?

Kilpatrick pushes tax cut:

http://www.detnews.com/apps/pbcs.dll/article?AID=/20070310/METRO/703100399

(Message edited by lmichigan on March 10, 2007)
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Detroiterinspirit
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Username: Detroiterinspirit

Post Number: 34
Registered: 01-2005
Posted on Saturday, March 10, 2007 - 4:54 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

I am being sarcastic.

Kwame's past and current plans are nothing but smoke and mirrors and I lost all hope and faith in the citizens of Detroit when they re-elected him and basically re-elected the city council.

Detroit-Receivership
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Lmichigan
Member
Username: Lmichigan

Post Number: 5196
Registered: 10-2003
Posted on Saturday, March 10, 2007 - 5:46 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

That's really too bad, that you have your mind made up, and all, and again, the name. Well, looks like another name I can ignore, outright, from now on. lol

(Message edited by lmichigan on March 10, 2007)
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Danny
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Username: Danny

Post Number: 5615
Registered: 02-2004
Posted on Saturday, March 10, 2007 - 7:08 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Recievership here we come. Where all Detroit leaders will do nothing to voice their views of city business. Our city politicians would be stuck in their paper signing stupidity while the financial planner would voice its views of how the money should be spent on city services.
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Eric_w
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Username: Eric_w

Post Number: 44
Registered: 02-2007
Posted on Saturday, March 10, 2007 - 3:39 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

Detroit's been mis-managed for decades even before Coleman Young. Detroit will probably never rebound to anything near what is was because there are no decent paying jobs for city residents-the population is way way down & that means fewer people paying taxes which in turn equals less & less businesses that can be supported. Look around there's vast tracts of unused land all over town sitting not developed not on the tax rolls. Just look at the Michigan Central rail Station & Tiger Stadium. Imagine if there was housing and businesses there? How much more revenue would that generate?
Though this wouldn't solve the defict-I'd make Kwame move out of the Manoogian Mansion & close it up. He can afford a house. Then cut the council's pay and Kwame's 30% Cut his police detail down to 1-2 officers-he isn't the president & make him buy his own wheels ( GM, Ford or Chrysler need the dough). Eliminate city cars,expense accounts and other perks for City department heads-make them share the pain.That might save a few million bucks-at least it would be something. If those clowns can't or won't make do without let them find a real job.
And try working to get the neighborhoods fixed up. If 10% of the time & money had been invested there instead of downtown maybe things wouldn't be so bad. An idea would be to give away vacant lots to citizens with the stipulation they must build a home on it-like a 21st century homesteading program. But since the city government is so incompetent, it would never work.
I thought the Super Bowl was supposed to be "the" catalyst in Detroit's comback-no wait that was the casinos- sorry I meant a new ball park for the Tigers. Oops, I meant the GM Poletown plant, actually I mean Cobo's prior expansions or the Ren Cen.....
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Emu_steve
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Username: Emu_steve

Post Number: 173
Registered: 11-2006
Posted on Sunday, March 11, 2007 - 1:12 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

In any earlier post in this thread I asked what % is the budget deficit to total city budget.

Here is the answer from the News article:

"The $163 million deficit is the first time Detroit's deficit has exceeded 10 percent of its total budget of $1.4 billion, which is a factor a state review team can weigh when appointing an emergency financial manager, said Louis Schimmel, a municipal bond expert who was emergency financial manager for the city of Hamtramck for five years until 2005."

The % of deficit to total budget is pretty big.
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Detroiterinspirit
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Username: Detroiterinspirit

Post Number: 35
Registered: 01-2005
Posted on Monday, March 12, 2007 - 6:13 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Lmichigan,

Believe me it doesn't hurt my feeling that you will ignore my posts. We all have varying opinions and that is what is great about on-line forums like this.

My name is based on the fact that I was born and lived in Detroit for the first 25 years of my life and then in St. Clair Shores for the next 16 years but recently moved to the Chicagoland area. Although not a legal resident of Detroit, I am very interested in the City and hoped for many years that a combination of state, local, and business leaders could help the City regain a portion of its past glory for more than a two week period around Super Bowl...

I'll keep my name as is, as I still hope the City could rebound. Because of the state of the City, I do truly believe Receivership is the only way to turn it around...

Can you provide your list of "Cons" against Receivership? I'd like to get your POV.
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Trainman
Member
Username: Trainman

Post Number: 355
Registered: 04-2006
Posted on Monday, March 12, 2007 - 10:35 pm: Edit PostDelete PostMove Post (Moderator/Admin Only)

A change in the state constitution can allow counties to raise sales taxes. This was the only purpose of the illegal DARTA agreement. There were no efforts to improve bus service and industry support was rejected at the meetings then our regional leaders cancelled meetings.

A county wide sales tax to take our DDOT will cut off over $70 Million from the Detroit budget.

You all DY'ers see, KWAME is not stupid at all but instead he is very SMART.
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Japes
Member
Username: Japes

Post Number: 5
Registered: 02-2007
Posted on Tuesday, March 13, 2007 - 12:08 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Detroit isn't the only city to be in this bad of shape other smaller and some not so small ones are in much worse shape. Look at it on a per-capita basis, it is scary for almost any city in Metro Detroit / Michigan.

In most cities you have DDA/TIFA which capture the redevelopment dollars in the area where you have a tax base. So even if a business moves in to those redeveloped areas the cities general fund doesn't benefit from it.

It is a very complicated issue, state has cut revenue sharing, cable franchising fees and now wants to charge cities $7.50/ton of garbage to stop Canadian trash. You have contracts, you still have to pay pensions.

In most cities today 80-90% of a budget go to wages, insurance, and funding retirement plans. That doesn't leave a lot for other projects, and in Detroit and other interring suburbs that number in most cases is closer to 95%-105%. These problems are 60 years in the making, they don't get fixed over night.
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Jt1
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Username: Jt1

Post Number: 8511
Registered: 10-2003
Posted on Tuesday, March 13, 2007 - 12:16 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

quote:

Then, the state will run the city until its financial status recovers sufficiently to allow elected government to resume running things again.



Yep, because the State did a wonderful job with their takeover of DPS. Took it over with a surplus and left it will debt of 10s of millions, if not 100s of millions (I can't recall the number).

I like the idea of receivership if it brings in financial stability but the State's handling of DPS gives me very little reason to believe that the State will do a better job.
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Queensfinest
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Username: Queensfinest

Post Number: 53
Registered: 08-2006
Posted on Tuesday, March 13, 2007 - 12:29 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

I notice there has been a lot of talk on the forum concerning Detroit going into receivership and the state of Michigan bailing the city out financially.

I wonder if the state is even capable, given its own financial problems and I suppose all around incompetence as far as economic policy?

I know it would be unprecidented, but I wonder if the situation in the state continues to worsen if some sort of federal intervention might be in order. Not saying this would help for sure. I guess the example of New Orleans and Katrina comes to mind, but the situation in Michigan is the closest one I can think of other than the hurricane where a place might genuinely need outside help.

Now, the feds have pretty much missed their chance in New Orleans and maybe Detroit would benefit just as poorly, but I'm thinking of situations like the Bay Area earthquake 1n 89 or 90 and the way the government stepped in.

Maybe they don't consider Detroit and Michigan to be as important as Northern California? I don't know. This is just a thought. Maybe the only thing that could save the state is Federal intervention though? Germany invested massively in Berlin and now other smaller towns and it was basically their only way up. What do the forumers think?
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Lmichigan
Member
Username: Lmichigan

Post Number: 5219
Registered: 10-2003
Posted on Tuesday, March 13, 2007 - 12:32 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

I'm not going to speak in favor or receivership, but the DPS takeover isn't the only example. You have Flint, Hamtramck, Highland Park...some of these are relative success stories, some aren't. My point is that there is more than one example.
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Livernoisyard
Member
Username: Livernoisyard

Post Number: 2746
Registered: 10-2004
Posted on Tuesday, March 13, 2007 - 2:04 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

For the benefit of any Alsheimer's-prone forumers, Engler passed the baton at DPS over to Mayor Archer during the late 1990s. Golly! Wasn't he the Democrat mayor of Detroit back then? The state put up the money, but Archer was supposed to be the head honcho in management overall at DPS. So the then mayor not only couldn't rule Detroit very well, but he couldn't rule DPS very well either.

And stow that ridiculous notion of a surplus at DPS. And the rest of your nonsense. Bureaucracies never have a "surplus" for long. They always find ways to spend any short-lived "surpluses."

I yield the rest of my time now to the fiction department over at DY...
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Lowell
Board Administrator
Username: Lowell

Post Number: 3724
Registered: 10-2003
Posted on Tuesday, March 13, 2007 - 2:52 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Actually the City of Detroit needs a lot more people to move out.

It needs about three hundred thousand homeless, felons, disabled, jobless and impoverished citizens to move out to the surrounding communities to the point where all communities share the burden they so conveniently leave to Detroit's care while many so smugly snicker and shake their code-speak fingers. They don't need to take more than the City of Detroit's proportion of this tax-costing but non tax-paying populaton, just an equal proportion and Detroit will get well over night.

When I hear this sanctimonious redux for the umpteenth time on this forum, followed by the dredging up the ghost of Coleman Young and all the other old saws, I don't know whether to yawn or scream.

Receivership, yeah sure! Just like the ballyhooed takeover of the DPS was going to be the magic pill. LOL @ how fast those carpetbaggers dropped that hot potato with David Adamany leading the charge for the doors. They learned quickly enough that pompous rhetoric was not a solution to the deep burdens the DPS schools must carry. Try reading detroitteacher's accounts for a taste of that.

Until this metropolis [and state] gets together to abolish its borders, end sprawl and start the sharing of resources and burdens instead of ghettoizing them in Detroit, Highland Park and a few other spots, we will continue to endure our hollow tree syndrome [and these arguments] that are dragging down every community and damaging the image of our entire region, industrial products and spirit.

Metropolitan union now.
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Trainman
Member
Username: Trainman

Post Number: 356
Registered: 04-2006
Posted on Tuesday, March 13, 2007 - 6:31 am: Edit PostDelete PostMove Post (Moderator/Admin Only)

Your right Lowell, if Detroit ran a decent bus system then Livonia would still have bus service.

The fact is that forty five per cent of us voted to save SMART. While at the same time Detroit city council slept through the meetings and ignored the rotten DDOT management who made even the most strongest transit tax increase advocates very angry.

It's time to fire incompetent government officials and replace them with those who care. Then we can and will have a decent respectable mass transit system. There is very strong support for this among both city and suburbanites.

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