08/19/2013 06:00 EDT | Updated 10/19/2013 05:12 EDT

What Detroit Can Learn From Canada

Detroit's declaration of bankruptcy has shed new light on the problems afflicting the city. Detroit's population has dropped precipitously -- from a height of 1.8 million in 1950 to 951,270 in 2000, to around 700,000 by 2013. Empty lots and abandoned buildings are a prominent sight around the city. Detroit is afflicted by poverty, with 36.2 per cent of residents living below the poverty line from 2007-2011, compared to 15.7 per cent for the state as a whole. Unemployment stood at 16 per cent in April 2013, while the state-wide rate was 8.4 per cent.

With high rates of poverty and a limited tax base, Detroit is challenged to raise revenues to maintain services, in education, public transit, garbage collection, police and fire. As an example, 40 per cent of the city's streetlights do not work.

Where the City of Detroit, as per the 2010 US Census, consisted of 713,777 people, Detroit's Metropolitan Statistical Area (MSA) had an overall population of 4,296,250. Across this MSA region, there are 207 municipal units, including overlapping units such as counties. Municipal reform is hindered by the strong tradition of local control and autonomy in the United States and especially in the state of Michigan.

Former Labor Secretary and UC Berkeley professor Robert Reich illustrates the challenges of this decentralized and fragmented local government structure well in a post on his website, citing how Americans are increasingly segregated -- geographically -- by income. "Forty years ago," writes Reich, "most cities (including Detroit) had a mixture of wealthy, middle-class, and poor residents. Now, each income group tends to live separately, in its own city, with its own tax bases."

Reich further highlights that while Detroit is impoverished, many of its suburbs are among the most affluent in the country, with Oakland County being the fourth wealthiest county (of those with a million or more residents) in America. "Detroit," Reich continues, "is a devastatingly poor, mostly black, increasingly abandoned island in the midst of a sea of comparative affluence that's mostly white."

This creates an environment where relatively affluent suburban municipalities have the tax-base to provide good quality public services, while the central city -- Detroit -- suffers. Municipalities like Dearborn and the Grosse Pointe municipalities geographically look like they were carved out of Detroit, to preserve (comparatively) more affluent tax-bases.

There are fundamental structural issues hindering Detroit, that helped precipitate its bankruptcy. In this context the Canadian example -- where there is a greater tradition of provincial reorganization of local government structures, and where there have been more fundamental reforms, can be illustrative.

At the beginning of the 1960s, the province of New Brunswick was faced with glaring regional inequalities, where county governments were charged with providing a range of services from health, to social welfare, to justice, to education. Where affluent counties did well, poorer counties suffered under high taxes and poor quality services, with some counties unable to meet expenses and -- in some cases -- teetering close to bankruptcy.

In the 1960s, a progressive and reformist Liberal government, under Premier Louis Robichaud, carried out a fundamental restructuring of local government known as the program of Equal Opportunity. Services such as healthcare, education, justice, and social welfare were centralized at the provincial level, county governments were abolished as a redundant and overlapping level of government, and property tax assessment was centralized at the provincial level. Furthermore, a system of equalization payments was introduced to help more cash-strapped municipalities.

These reforms were controversial at the time, but were key in equalizing service provision and taxation across the province.

Another Canadian example is in Manitoba, where the Greater Winnipeg Area was amalgamated into one municipal entity in 1971 under another progressive and reformist government, an NDP government led by Premier Ed Schreyer. Like with Equal Opportunity in New Brunswick, the aim of regional amalgamation was equalization of services and taxation, in this case between an inner-city which contained high rates of poverty, especially among Aboriginals who had moved to the city, and relatively affluent suburbs.

A 1972 document from the Government of Manitoba identified Winnipeg as both "a prime generator of economic life in the province" and "the greatest single repository of social ills within the province." Hence, a goal to both better deal with poverty in the city while enhancing Winnipeg's role as an economic engine for the province.

Neither system is perfect. In New Brunswick, municipal governments can often feel stifled from basic actions due to the province's extensive oversight and, in Winnipeg, a common complaint is that suburban councillors outnumber inner-city ones thus dominating city council overall. However there is no denying that, even with shortcomings, both reforms were major improvements in equalization of service provision and fundraising ability.

There must be serious consideration of fundamental local government reform in Michigan. Suburban municipalities in Metro-Detroit cannot escape responsibility for the inner-city's problems, and must realize a common sense of purpose across the metropolitan region. An impoverished, literally bankrupt, central city is a blight on the reputation of the region as a whole. Furthermore, a healthy inner-city can be a prime economic generator for the region as a whole.

Fundamental reform, whether a two-tier system with a regional metropolitan government (or some form of institutionalized cooperation) alongside local municipal governments, or something more fundamental along the lines of amalgamation or centralization, must be considered for the long-term health of the City of Detroit, and for the long-term prosperity of the metropolitan region as a whole.

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