| Article IX § 24 |
CONSTITUTION OF MICHIGAN OF 1963
§ 24 Public pension plans and retirement systems, obligation.
Sec. 24.
The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.
Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.
History: Const. 1963, Art. IX, § 24, Eff. Jan. 1, 1964
© 2009 Legislative Council, State of Michigan
Detroit was placed between a rock and a hard place. GM abandoned good governance of it's own industry and outsourced the jobs that created Detroit in it's best days. While GM was viable and under good management the city grew and grew and grew. Then the worst happened, the tax base was lost along with the failure of it's largest private industry, GM.
Detroit was far too large both in square miles and population to continue to carry out services with an ever shrinking tax base. I blame GM's Roger Smith. He engineered the beginning of the decline of Detroit. He didn't care and if he was any kind of CEO he would have improved his product and not looked for cheap profits.
As the tax base shrank and services couldn't be carried out to support communities the city continued to deteriorate. The Detroit government began to skip funding into the pension funds and the short fall never stopped. There was also corruption that certainly didn't help the city, but, it never amounted to the monies the pension fund was suppose to be worth.
The rest of the narrative is all to familiar to Americans whom lost homes.
Politicians (click here) made a habit of skipping payments pension contributions, effectively stealing from the pockets of retirees, to fatten the wallets of corporations and business interests through subsidies and tax expenditures. At the same time, Wall Street pushed politicians to shift pension fund assets into risky "alternative" investment classes to reap millions in hedge fund management fees. Now, underfunded from a combination of these factors and the 2008 market crash, public sector retirement plans are under further attack from reform groups that vastly overstate plan underfunding in hopes of converting defined benefit plans to defined contribution plans.
Skipping payments was a matter of fact. The Detroit Treasury could not keep up with the loss of tax incomes. There aren't many other cities in the USA that have major auto manufacturers as a local industry either. The loss was monumental. Detroit had little to chance to recuperate.
The subsides were to attract new business to Detroit to recover from the loss of it's major local industry. There was no way there would be any other industry coming into the region that would employ all the workers once employed by GM and provide the tax base those employees supported. Detroit was doomed.
The city's government was doing everything it could to rebuild. As the tragedy became more and more real, the city became desperate and the faux security of Wall Street under Bush was the carrot and stick that pushed the city into 'risk' where it never had before.
Then came the market crash of 2008 and the handwriting was on the wall. It was going to destroy Detroit.
The problem for some time was that Detroit wasn't alone in it's ability to survive. When GM left Michigan the state also became vulnerable to rising unemployment and loss of a strong tax base. The holes in the Michigan economy were far to large to be mended. So, the state in the early years was mostly unavailable for any bailout, loans or restructuring agreement. Michigan was hit hard, and it was as though every city was traumatized without exception.
So, when people want to point fingers at who's fault it is, the real answer is Wall Street Greed without a conscience to respect the people hoping something would work out in time.
When Snyder came into office it was simply a matter of manipulating the circumstances to make it possible to destroy democracy and slice and dice the city into manageable lots for sale to his friends.
There was no big picture that a Wall Street genius is suppose to bring with him when elected to a public office. Snyder is not an innovator. He is not a builder. He is, however, one who believes in destroying an entity for the sake of profiteering . He isn't a beam of hope. He is Republican that believes in shrinking and eliminating government. Detroit didn't have a chance.
Snyder has been the most negative governor Michigan has ever had. Michigan needed big ideas to replace the one that left. One would think someone like Snyder would seek to build and bring industry to the state to turn it around. He could not do that, he doesn't have the DNA. Michigan is evidence of it and Detroit the best example.
