In 1950, Detroit was one of the largest and most prosperous cities in America with a population of nearly 2 million. Paychecks and tax revenues from the booming automobile industry rippled through Michigan and beyond. Safe, lively neighborhoods were home to another generation of proud, self-reliant American workers and their families.
Today, Detroit is a city of 700,000 residents in chronic decay. The auto companies became increasingly uncompetitive as their costs to build cars continued to climb, including unaffordable worker pension and health care plans. Jobs disappeared, homes were abandoned and schools and factories were boarded up. Nearly two in five Detroit residents now live in poverty. Crime is so rampant that police often cannot respond to calls. A corrupt former mayor was convicted for lavishly spending taxpayer dollars for personal use.
The declining American automobile industry was not solely responsible for Detroit’s woes. Many years of gross financial mismanagement by public officials has left the city in a deep financial hole. Even as the population and tax revenues declined, elected officials awarded unsustainable pension and health care benefits to municipal employees. The future of Detroit and its citizens is now being smothered by $14 billion of long-term liabilities and a $327 million accumulated budget deficit.
Gov. Rick Snyder of Michigan recently appointed an emergency financial manager to help rescue Detroit from financial collapse and the erosion of government services for its residents. Detroit is the largest city in U.S. history to be taken over by its state.
Thirty minutes to the north, the city of Pontiac is on the mend. Since 2009, emergency managers have been making difficult and unpopular decisions to put this city of 60,000 on the path to financial solvency and better lives for its people. They have renegotiated unaffordable labor contracts; outsourced police protection to the county sheriff’s department; and merged the fire department with that of a neighboring township.
To further save money and improve accountability, Pontiac’s garbage collection and street maintenance are now performed by private companies. The municipal payroll shrunk from 600 to 50 employees. Annual spending has been reduced from $57 to $36 million.
The results of these painful decisions have begun to bear fruit. Three years ago, like Detroit, Pontiac was a ghost town with vacant homes, empty schools and 30 percent unemployment. Today, new businesses and residents are investing in the downtown area, creating more jobs. Storefronts are 90 percent full, up from 50 percent in 2010. Streetlights have been rewired and new residential lofts are on the market.
During the past 40 years, residents of Maine cities and towns have suffered from problems similar to those of Detroit and Pontiac, Mich. When I was growing up in Waterville, the shores of the Kennebec, Androscoggin and Penobscot Rivers were dotted with paper, textile and woolen mills and shoe factories. Paychecks were flowing to families who enjoyed steadily improving lives from the time when our Franco-American ancestors immigrated to Central Maine farms and factories from Canada.
Regrettably, since that time, our state government has made it increasingly expensive and complicated to conduct business in Maine. High taxes, burdensome regulations, and costly energy and health insurance have chased away many companies and their jobs, and our young families.
What can we learn from the troubles of Detroit and Pontiac, and from our own experiences here in Maine? How can government help our citizens live better lives?
First, many of government’s problems are self-inflicted. Voters should demand financial experience, honesty, and discipline from elected officials. Just like our frugal families, government should live within its means. The resulting lower taxes and less public debt will keep more hard-earned money in the pockets of our struggling families.
Second, problems get bigger when they’re kicked down the road. We teach our kids to address their difficulties head-on. Government should do the same. We should encourage our public officials to have the courage to do what is right, and reward them at the ballot box for doing so.
Third, we must help our businesses to be successful. They employ our fellow Mainers. Those jobs lead to more prosperity and less government dependency and poverty. Those jobs generate the tax revenues needed to pave our roads, educate our children, and care for the most disadvantaged among us.
Let’s root for Detroit to pull itself out of its horrible financial mess. Here in Maine, let’s all work together to ensure that our state and local governments are affordable, and that they support our businesses and the jobs they create. We can help do this by eliminating wasteful government overspending, consolidating services whenever possible, and using Yankee common sense when conducting our affairs. This path will be good for Maine.
Bruce Poliquin is the former Maine State Treasurer and a 2012 Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a proud third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the State about the important issues facing Maine families and their jobs.