Friday, March 20, 2009

State takes over Pontiac's finances

According to the news, the state is appointing a manager to run Pontiac. Flint was state-run from 2002 to 2006, and other declining urban areas, Hamtramck and Highland Park included, have suffered the same fate. Local leaders have been unable to close deficits that keep growing every year as population and tax revenue declines.

Could Detroit be next? Not likely. The politics would be brutal. But the state has taken control of Detroit Public School's finances for the second time, and the city itself is facing a $300 million deficit -- the latest in a series of chronic, growing deficits that have no easy solution. Every tax hike drives more residents and businesses away, but so long as the city's population continues to slide, the city will continue to have less revenue each year to provide services to the same size area. This is an equation for disaster -- day by day, dollar by dollar.

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