Sunday, March 23, 2008

The Resurrection of Detroit and Wayne County by Akindele Akinyemi

Jesus Christ was resurrected on the third day this Easter Sunday. Detroit will not be resurrected at all unless we come up with concrete ways to purge the current leadership out and bring in fresh new faces with free market ideas and agendas. Detroit is no longer the Motor City but a city that has faced embarrassment from silly and poor leadership. If candidates who are running for office would just take the time to review our One Detroit Agenda in our Network Detroit within 10 years will become a global financial market similar to Hong Kong, Taipei, Seoul and Singapore.

There are two main reasons why people decide to migrate into or out of an area: good paying, career oriented jobs and the quality and cost of living. Areas around the country that have been successful in adding migrants have also been successful in creating jobs. Unfortunately that is an area where the Detroit region —and its linchpin Wayne County —had been lackluster. From 2000 until early 2007, there has been no net increase in the number of private sector payroll jobs in the metro area.

The second factor driving people to leave Detroit is quality and cost of living. Principal among
these are taxes. There can be little doubt that high property taxes, especially school levies, in Wayne County are a principal reason for folks moving out. Since taxes affect not only households, but businesses, they are a detriment to creating jobs that could stem the tide of population losses.

Why is migration so important? It is very simple. There is no more powerful or direct indicator of how a place is doing and how it is perceived than whether people stay or leave. So we must ask; why are so many people still leaving Detroit? Two key items that might explain moving decision come to mind.

Number one: good paying, career oriented jobs, especially for folks just starting out or who are not too old to make a major move to improve their earnings capacity and lifetime accomplishments. Clearly, there are both push components and pull components in those factors. Parts of the country that are growing and where jobs are being created at a rapid
rate offer more and better opportunities to land a good job and will therefore attract a lot
of job seekers from other areas.

For example, Mecklenburg and Wake Counties in North Carolina have each added over 130,000 new residents in just the last six years— huge percentage gains. A very large part of those population gains is a direct reflection of the tens of thousands of jobs being created in their region since 2000. Bear in mind that growth begets growth. Jobs bring more people. More people foster more jobs and so it goes.

Sadly, for a long time, Detroit and most of Wayne County have been doing a very poor job of expanding private sector employment. And more recently during the last several years the seven county metro area —of which Wayne County is more than half and is clearly the region’s linchpin—has had an unbelievably lackluster record of producing jobs. Indeed, from February 2000 to February 2007(the last monthly data available as of this writing), there has been no net increase in the number of private sector payroll jobs in the metro area. Seven years with no net growth. That is a stunning development in light of the growth that is happening elsewhere in the country.

The second factor driving people to leave is a combination of characteristics that fall under the general heading of quality and cost of living. Of course, those would have to include climate, ease of getting around, condition of one’s neighborhood and last, but not least, taxes.

There can be little doubt that high property taxes in Detroit are a principal reason for folks moving out. On the other hand, school taxes in many Wayne County districts are double the rate they would pay on comparable homes in other regional counties and several times what they would pay in many Sun Belt states for comparably valued homes.

But then the obvious question arises, why are taxes so high in Detroit? There is no way around it. The short answer is that school and government spending are too high across the county, especially in the City of Detroit. Per student outlays in most school districts are higher than the statewide average and far above the national level. Unhappily, with the coming jump in money needed to fund teacher pensions, school taxes are set to go much higher all across the state but more in Wayne County where the average teacher pay is well above the state level.

The State, the County and the City have dumped countless millions into projects that were little more than fanciful, wishful thinking. Precious tax dollars that should have stayed in taxpayer pockets.

That is not to say that no good things have happened. Obviously there have been some success stories and promising developments. But we must look at the whole picture and it is not very good.

Clearly, the picture in Detroit and Wayne County is not good from the standpoint of jobs and
population growth. If we want to change that picture a lot needs to be done to rein in government spending and make the area more attractive to business. That is, other than
just handing them taxpayer cash. The following 10 steps toward a solution have been
recommended before, but they are still the most promising actions to help turn the
situation around:

1) Enforce the state law when teachers decide to strike and start reining in school spending. Otherwise,we are going to be hit with significant tax hikes to pay for teacher pensions.

2) We need to have reforms in place to require arbitrators to look at compensation, benefits and
working hours and conditions of comparably situated police and fire departments. Also require that the financial condition of the municipality be taken onto account. At a minimum those two changes need to be made.

3) End the right of transit workers to strike.

4) Eliminate prevailing wage requirements for public construction.

5) Stop using Tax Increment Financing for retail, residential and entertainment

6) Quit using tax dollars to subsidize private businesses, especially the underwriting
of moves within the county.

7) Enact legislation requiring a referendum for all tax rate increases, no exceptions.

8) Stop wasting money on things such as block grant money for social programming.

9) Outsource or privatize as many non-core government functions as possible.

10) Be very leery of new state programs that sound good but that inevitably produce
more bureaucracy and more cost with far fewer benefits than promised.

If we can do this the Resurrection of Detroit and Wayne County will occur. The only way this can happen if we put in place the right leadership. Today, we have people running for state representative in their district. We should push these people to ask the burning questions of how to reverse the trend that is occurring in our region. If they are not ready to take these issues on then have them sit down and take a number until 2010.

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