Right or wrong, Krystal Crittendon’s legal maneuvers prove Detroit needs bankruptcy
If we are, for the sake of argument, to believe Detroit Corporation Counsel Krystal Crittendon when she says the state owes multi-million dollar unpaid debts to the city of Detroit, then consider what that really means.
To accept Crittendon’s allegations, then we have to assume a city that was on the brink of running out of cash routinely shrugged its shoulders at large outstanding debts. No one did anything about it. Not Mayor Dave Bing, not his elected predecessor Kwame Kilpatrick, not the various incarnations of City Council, and certainly not the bureaucratic leviathan that occupies much of the Coleman Young Building.
That’s a pretty damning indictment of Detroit’s political culture right there, and all the reason necessary to temporarily put the city's finances in the hands of an outside special master. What’s more, if we accept Crittendon’s case, then it’s also hard to view the state as a good-faith actor in this process.
If, on the other hand, we believe that Crittendon is offering legal woo-woo, then we have to ask ourselves how a consent agreement or an emergency manager is even remotely tenable?
After all, under this more likely woo-woo scenario, Crittendon is a quasi-independent legal actor who has shown a willingness to take frivolous legal action to gum up the works.
Either way, the city is broke. The streetlights don’t work. The cops don’t come when they’re called. The grass isn’t cut. The buses don’t run on time. Something needs to be done to right the fiscal ship.
Crittendon’s windmill tilting may be the best reason yet to forgo consent agreements and emergency managers. Just send Detroit to a bankruptcy court.
Chapter 9 bankruptcy completely forgoes political processes and effectively treats the city like any other entity that is unable to repay its creditors.
Now, municipal bankruptcy is a complicated thing. Under Michigan law, an emergency manager would have to be appointed first.
At the same time, it would be no great trick for city and state officials to lay the groundwork so Gov. Snyder can appoint an EM who immediately walks the whole mess directly into bankruptcy court. Fans of the GM restructuring may remember the phrase “managed bankruptcy.”
Yes, bankruptcy probably means regional bond rates will go up. You know what? That’s the price we all should have to pay for allowing Detroit’s fiscal collapse.
If everyone was so damned worried the regional impact of Detroit’s finances, then maybe someone (looking at you, Jennifer Granholm) should have complained when the city was going years without sending audited financials as required by law.
And maybe someone should have recognized the inevitable cost of zero-sum policies that pitted regional governments against each other. Chickens home to roost, and all of that.
Crittendon’s legal gambit proves once and for all that the politics are far too tenuous for a not-quite-bankruptcy political solution to work in Detroit. Let’s just put Andy Dillon and Joann Watson in a corner, and allow a bankruptcy judge—as reasonably impartial and apolitical an actor as one can find—to clean up Detroit’s books.
The sooner Detroit gets into bankruptcy court, the sooner it comes out the other side with a (hopefully) more functional, solvent government.