ELEPHANT CORNER: Detroit’s Fate Could Be Philadelphia’s Next

Filed under: Columns,Latest News |

Normally, events in a city in the Midwest would be of minimal interest to those of us in Philadelphia. However, a recent report from KEVYN ORR, the Michigan state-appointed emergency manager of the City of Detroit, offers some warning signals for other large cities, including Philadelphia.

Orr noted, “The path Detroit has followed for the past 40 years is not sustainable.” The City is Insolvent owing to spending more than it takes in. Failing schools, onerous taxes and other restrictive policies on the private sector have pushed business and the middle class to the suburbs, reducing the taxpaying community and thus city revenues. Detroit’s population now includes too many people reliant on tax revenues, namely the poor and municipal employees, and not enough private-sector taxpayers. Detroit’s population is now one-quarter of what it was 40 years ago.

City officials exacerbated their fiscal problems by continuing to enter into contracts with municipal workers that offered attractive benefits, including sizable retirement plans. The report highlights that retirees exceed current employees two to one. This would not be a problem if the pension plan was not grossly underfunded.

Sound familiar? Philadelphia has roughly 30% more former municipal employees collecting pensions than we have current city workers; not to mention an underfunded pension plan. We too are relying on future revenues to fund these obligations. While our city has not shrunk as significantly as Detroit, we lost one-quarter of our population between 1950 and 2000.

Despite the fact Detroit is waving at bankruptcy, the city’s unions and many local officials there are in denial – with the noted exception of Detroit MAYOR DAVE BING, businessman and former NBA star, who appears to fully grasp the problems. A local Michigan official of the American Federation of State, County & Municipal Employee said Orr’s report is part of “a cooked deal for them to take control of the City and take the assets.” I assume the “them” includes Republican GOV. RICK SNYDER. I doubt Snyder has any interest in assuming control and thus responsibility for the City’s infrastructure assets, which are a mess owing to poor maintenance.

Does this sound eerily familiar? The cries of our municipal unions and City Council members that do not want to see Philadelphia’s water and gas utilities (both needing upgrades) sold to private hands for fear that the AFSCME and patronage jobs may be lost.

We in Philadelphia should look carefully at the situation in Detroit. Fifteen years ago, I am sure that few expected Detroit to devolve into its current status. I believe if we do not deal with our onerous, underfunded pension obligations, we will be facing serious fiscal problems sooner than many anticipate.

Increasing tax rates is not the solution, as we saw in Detroit. Raising taxes in Detroit did not lead to higher revenues but rather it chased taxpayers out of the city.

Last Thursday the heavy-hitting Republican 21st WARD LEADER WALT VOGLER held a fundraiser at Finnigan’s Wake for his ward. As in the past, his annual fundraiser was in the spring before the primary, but it used to be located within the 21st Ward (Roxborough-Manayunk). The new, central location attracted a larger and more-diverse crowd (in the sense that more elephants from other parts of the city showed up). A number of other ward leaders came out to support Vogler, including his son CHRIS, JOE SAMUEL, CALVIN TUCKER and MATT WOLFE. Republican City Committee General COUNSEL MIKE MEEHAN was also there.

Tuesday night the Philadelphia Young Republicans held a fundraiser for Republican District Attorney candidate Danny Alvarez at Paddy Whacks. The event was well attended. STEVE BOC, the chairman of the Yrs, was the master of ceremonies. Alvarez, a former Philadelphia Assistant District Attorney, will be facing incumbent DA SETH WILLIAMS in November.

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