The bankruptcy filing for Detroit marks a final step in the chrome-plated city’s decades-long decline – which started with the country’s overall manufacturing slowdown and continued with the departure of U.S. automakers and residents, leaving behind a sprawling city trying to survive on dwindling coffers.
Detroit was in the 1950s a worldwide hub of auto manufacturing, making it the fourth-largest U.S. city with one of the country’s highest per-capita incomes.
However, the so-called Motor City’s decline started soon after with residents — following their counterparts in other U.S. cities – starting to move to the suburbs and take with them businesses, jobs and tax dollars.
Historians argue the deadly 1967 riot in Detroit, one of the many so-called “race riots” across the country in the 1960s, accelerated the trend.
And as the population dwindled from roughly 1.8 million to 700,000, city officials struggled to keep up with municipal services in the 142-square-mile city, with a tax base just half of what it was in the 1950s.
Meanwhile, auto companies began opening plants in other cities as Japan-made cars dominated the international market. By 2009, the U.S. auto industry collapsed with the entire economy, eventually pulling down Detroit with it.
The city’s efforts to provide and maintain such basic services as law enforcement and trash removal were further complicated by the costs of paying union contracts and benefits, which have contributed to nearly $15 billion in unfunded liabilities for the city.
State-appointed Emergency Manager Kevyn Orr on Thursday filed the bankruptcy, making Detroit the largest U.S. city to declare one, after failing to negotiate a restructuring of union contracts to lessen the city’s financial burden.
Orr, appointed in March by Gov. Rick Synder, appeared to have little choice, considering Detroit had a general fund in the red for roughly the past nine years and a fiscal 2012 deficit of $327 million.
In addition, Detroit has a roughly 18 percent unemployment rate, one of the country’s highest violent-crime rates and about 80,000 blighted or abandon buildings.
“Chronic budget problems have taken a significant toll on everyday life for citizens,” Snyder said recently. “Detroiters deserve to feel safe when they walk down the street, to have their street lights on, to have the bus show up to take them to work.”
However, the city also has a history of corruption that has led to its financial problems, including Mayor Kwame Kilpatrick resigning in a 2008 sex-and-perjury scandal that cost the city almost $9 million from a lawsuit and legal fees.