It was announced Friday that the city of Pontiac, currently being run by a state-appointed emergency financial manager, was seeking to merge with Oakland County as one way to solve its fiscal problems. Oakland County Executive Brooks Patterson indicated that a merger would not be legally possible, leaving open the very real possibility of a Chapter 9 municipal bankruptcy for the city.
WDIV-TV4 in Detroit reports that this would be the first municipal bankruptcy in Michigan history. According to the federal government, less than 500 municipal bankruptcy petitions have been filed in the 60-plus years since Congress authorized a municipal bankruptcy statute. Pontiac’s fiscal landscape is dire but could have and should have been avoided if only the city’s elected officials had taken action earlier. There was plenty of warning that it was necessary, from Mackinac Center analysts and other quarters.
The Mackinac Center was so concerned about Pontiac’s precarious financial state that it dedicated an entire issue of Michigan Privatization Report, titled “The City of Pontiac: A Going Concern?” to the subject in 2006. Obviously, the writing was on the wall at least five years ago.
Throughout the publication we recommended that the city adopt a number of privatization initiatives to help get its fiscal house in order. Our ideas included contracting out for police services with Oakland County first and foremost and then fire services (including EMS) perhaps with a private, for-profit group. Other ideas advanced by Center scholars, such as selling the Pontiac Silverdome, were in fact adopted by the city, but the changes were apparently too little and too late.
The latest development surrounding Pontiac should be a giant shot across the bow of Detroit, which also is in bad shape. Ironically, 10 years ago the Mackinac Center also dedicated a full issue of the Michigan Privatization Report to reforms that should be implemented by Detroit officials to help right the city’s financial ship.
Regardless of the unit of government, Mackinac Center analysts have advanced fiscally sound practices since we opened our doors in the late 1980s. It is unfortunate that local leaders don’t adopt more of them, as we are confident it would help arrest costs and avoid making history for dubious reasons.