Democracy & Municipal Insolvency

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eBlog, 12/05/16

Good Morning! In this a.m.’s eBlog, we consider tomorrow’s mayoral recall election in the insolvent municipality of East Cleveland, after which we consider a stern editorial from the Richmond-Times Dispatch about the ongoing challenges to recovering from insolvency in the historic city of Petersburg, Virginia. Finally, with the Obama Administration preparing to vacate the White House by the end of the month, we look at a new report detailing its role in Detroit’s recovery from the nation’s largest chapter 9 municipal bankruptcy in American history.

Democracy & Insolvency. Tomorrow is Election Day in East Cleveland, a small municipality which has been seeking authority from the State of Ohio to file for chapter 9 municipal bankruptcy for nearly a year. This special election is to decide whether Mayor Gary Norton and Council President Thomas Wheeler will keep their jobs or be recalled. The Mayor is campaigning by claiming he has done a good job keeping the struggling suburb afloat, pointing to a big pay-down of debt and money saved by cutting overtime and converting to self-funded health care; he also claims a new Salvation Army Center, with programs for young people and seniors, will be a needed addition. Third, he boasts of the first new shopping space built-in the city in decades. In contrast, those supporting the recall argue he is undermining residents’ confidence in their city by pushing an annexation plan (with Cleveland)—even as the Mayor states the city’s long-range financial picture is unsustainable. Critics claim his lack of oversight of the department has led to misconduct by officers and costly settlements of lawsuits. Mayor Norton says the special election is a waste of money for the cash-strapped city, especially with a scheduled election coming next year. Tomorrow’s special election comes as the status of annexation with the neighboring city of Cleveland is on hold while Cleveland seeks an expert opinion with regard to what the impact would be on the city’s finances and operations.

Inflammatory Municipal Governance? The Richmond-Times Dispatch last Friday, in an editorial, (“Petersburg needs sunshine to restore”) wrote that  Previous Next Petersburg’s financial collapse has inflamed the citizenry: “The city’s response to its budget crisis has not restored trust. The editorial notes that the Virginia American Civil Liberties Union faults Petersburg officials for secrecy, a lack of openness. It cites special meetings called at the last-minute and held not only at inconvenient times but in cramped quarters: “The circumstances discourage public participation. Residents want to know. They have a right to know.” The editorial notes that Petersburg citizens have shown up at meetings with tape over their mouths, wryly noting: “This is not the image the city ought to project.” The Times-Dispatch thus applauded the hiring of the Robert Bobb Group to help Petersburg climb out of its deep fiscal abyss; however, writing: “The manner of the organization’s ascension troubles us, nevertheless. The process was not as open as it ought to have been. Jurisdictions should pursue a degree of openness greater than the law stipulates: Petersburg’s despair has implications for every citizen. Almost every function of government will be affected. Essential services have fallen under siege. Citizen cooperation remains key. Listen to the civic-minded people eager for engagement. Follow the ACLU’s advice. Let the sun shine.”

The White House Role in Detroit’s Recovery from the Nation’s Largest Municipal Bankruptcy. The Obama Administration has detailed in a nearly 60-page report, “Building and Restoring Civic Capacity: The Obama Administration’s Federal-Local Partnership with Detroit.” The report, released over the weekend, writes that a federal and local partnership commenced five years ago which used financial, technical and other support to help the city which emerged two years ago from the nation’s largest municipal bankruptcy. Federal staff was assigned to City Hall to work with community, business, and philanthropic leaders to identify resources to assist in Detroit’s recovery: financial assistance included more than $260 million in federal funds to demolish 6,000 vacant houses and a $25 million grant to improve Detroit’s bus system. HUD also guaranteed construction or rehabilitation of more than 1,400 houses across the city; while technical assistance from the Department of Energy helped install nearly 65,000 street lights.

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