News / Economy

City of Detroit Files for Bankruptcy

State-appointed emergency manager Kevyn Orr enters a news conference in Detroit July 18, 2013.State-appointed emergency manager Kevyn Orr enters a news conference in Detroit July 18, 2013.
x
State-appointed emergency manager Kevyn Orr enters a news conference in Detroit July 18, 2013.
State-appointed emergency manager Kevyn Orr enters a news conference in Detroit July 18, 2013.
Detroit, Michigan filed for bankruptcy in U.S. federal court on Thursday, making it the largest municipality in U.S. history to seek Chapter 9 protection. The filing is the latest move that comes after years of population decline and decreasing tax revenues in a city plagued by corruption and financial mismanagement.
 
The decision to seek bankruptcy protection comes as Detroit finds itself under the direction of a state-appointed emergency manager, Kevyn Orr.  He is trying to address an annual budget deficit of more than $300 million, and long-term debt that has soared to $20 billion.
 
But Michigan State University professor Eric Scorsone says Detroit’s path to bankruptcy did not occur overnight.
 
“It was a one-industry city. Unlike Chicago, New York and other cities that had economic diversity, Detroit really didn’t.  It had the auto industry, it had suppliers to the auto industry, and so as those went away, the city began a very long decline that’s really occurred over 50 years essentially,” says Scorsone.
 
At Detroit’s peak in the early 1950s, the population was at 1.8 million residents.  By 2010, it was down to around 700,000, with people fleeing the city amid racial tensions and declining job opportunities. 
 
The skyline of downtown Detroit is seen in this January 30, 2013, file photo.The skyline of downtown Detroit is seen in this January 30, 2013, file photo.
x
The skyline of downtown Detroit is seen in this January 30, 2013, file photo.
The skyline of downtown Detroit is seen in this January 30, 2013, file photo.
Wayne State University urban planning professor Robin Boyle says most of Detroit’s residents moved to the suburbs, or left the state altogether.
 
“They have so little disposable income to reinvest in their communities, that if they have money they leave, they go to the suburbs or they go to find work elsewhere, putting us into this vicious cycle that drives us further and further down. How you break that is the challenge in Detroit,” says Boyle.
 
In just the last decade, a bad situation in Detroit worsened as the industry that gave it the nickname “The Motor City” found itself in the worst financial shape since the Great Depression. The problem was triggered by slowing auto sales, amid declining home values and stricter lending practices, something Michigan State University professor Eric Scorsone says hit Michigan harder than most places.
 
“I think what really happened in the last 10 years though, Michigan went through a very significant 10-year recession, really unlike the country as a whole, and that’s when elected officials should have been responding and really didn’t,” says Scorsone.
 
Other Municipal bankruptcies in the US

  • City of San Bernardino, California filed 8/01/2012.  Debt = $46 Million
  • City of Stockton, California filed 6/28/2012.  Debt = $26 Million
  • Jefferson County, Alabama filed 1/9/2011.  Debt = $4 Billion
  • Central Falls, Rhode Island filed 8/1/2011.  Debt = $21 Million
Detroit’s elected mayor at that time, Kwame Kilpatrick, became embroiled in a corruption scandal that forced him from office and ultimately landed him in jail, a distraction that added to Detroit’s mounting financial woes.
 
But Scorsone says Kilpatrick is not solely to blame for the city’s current financial issues.
 
“Any city in this situation, no matter how good the elected officials and the managers were, would have had a very difficult time. So to be fair, I think it’s both. I think it’s a combination of both mismanagement and economic decline. It’s hard to say what proportion of each, but they’re both there,” says Scorsone.
 
Wayne State University’s Robin Boyle says amid Detroit’s economic mess are signs of hope in a downtown area now known more for its urban blight than thriving city life.
 
“General Motors moved down there. The downtown is beginning to see revitalization through the activities of one or two property investors, so that has strength,” says Boyle.
 
Detroit’s Chapter 9 bankruptcy filing begins a one- to three-month period of review by a federal judge. If the process moves forward, it could be several years before Detroit officially emerges from bankruptcy.

Kane Farabaugh

Kane Farabaugh is the Midwest Correspondent for Voice of America, where since 2008 he has established Voice of America's presence in the heartland of America.

You May Like

Video Analysts: Beijing Parade a 'Bazaar' of Stolen Technology

Show commemorating victory over Japan in World War II involved long, medium and short range missiles, a range of tanks and 200 fighter aircraft More

Bernie Sanders Surge Reflects US Shift on Socialism

Although most analysts say it is unlikely he will get the Democratic nomination, Sanders' campaign opens up questions and issues that are otherwise marginalized More

Video On IS Frontline, Kurdish Fighters Ready for Offensive

Peshmerga soldiers say although they need more heavy artillery, they are poised to take the fight to the Islamic State extremists on their turf More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Drowned Migrant Toddler Photo Triggers European Outragei
X
Henry Ridgwell
September 04, 2015 11:36 AM
The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Drowned Migrant Toddler Photo Triggers European Outrage

The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Russians Observe 11th Anniversary of Beslan School Attack

This week, Russians have been observing the 11th anniversary of the attack by Islamic militants on a school in Russia's North Caucasus region that killed more than 330 hostages, including 186 children. The three-day siege and massacre that started on September 1, 2004 took place in Beslan, a town in the republic of North Ossetia, and is one of the bloodiest terrorist acts ever in Russia. VOA's Mike Richman reports.
Video

Video Native Americans Debate: Father Serra, Saint or Sinner?

Pope Francis will canonize an 18th century missionary to Spanish California during a papal visit to the United States this month.  But some Native Americans have criticized the elevation to sainthood of the missionary priest, Junipero Serra. VOA's Mike O’Sullivan has more from Los Angeles.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video China Announces Troop Cuts at WWII Parade

Chinese President Xi Jinping Thursday announced plans to cut the world’s largest military force by 300,000 troops. The announcement was made during a massive military parade to commemorate victory over Japan in World War II. The event was shunned by most Western leaders and for some is raising fresh concerns about China’s military ambitions. VOA’s Bill Ide has more from Beijing.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.

VOA Blogs

World Currencies

EUR
USD
0.8978
JPY
USD
119.24
GBP
USD
0.6567
CAD
USD
1.3230
INR
USD
66.495

Rates may not be current.