The City of Detroit is one of the United States’ most remarkable bankruptcy stories – a formerly prosperous industrial production centre that, more than anywhere else in the country, was hit by a combination of financial crises and declining industry.
After dealing with the largest municipal bankruptcy in history, Detroit will receive over $300 million (£185 million) in federal aid aimed at improving the city over the next year.
The money, however, won’t be going towards reducing the incredible debt that the city has been struggling to repay. Instead, it will be used to clear away damaged and unused buildings and improve the city’s services for residents.
Over $140 million will go towards transportation aid aimed at improving the city’s aging bus system and heightening security for passengers and city workers. Trains and rail lines under construction will also be improved and upgraded.
$7 million of the $300 million federal aid budget will be used to bring down homes and public buildings that have been abandoned, with an additional $150 in funding to follow as part of a large-scale effort to ‘clean up’ damaged areas of Detroit.
While $300 million is a significant sum, economists have pointed out that it’s just a small drop in the bucket for Detroit. The city owed over $18 billion to creditors and may need to make severe cuts to health care and retirement benefits for city staff.
Indicators of Detroit’s decline are easy to see – an estimated 40 per cent of the city’s streetlights are not functional. Emergency services take 15 minutes or more to reach callers – a figure that’s over twice the United States national average.
City officials in Detroit face a difficult climate regarding federal assistance. Analysts have noted that bailing out the city would be an incredibly unpopular move for the government, as other local governments may expect similar treatment in the future.
