Money for Nothing if State Gives Detroit $350 Million

Published January 23, 2014

At a press conference Wednesday, Michigan Gov. Rick Snyder (R) explained why he wants to give $350 million in state money — which he insists is not a bailout — to Detroit.

Details are lacking, but Snyder says he wants an “investment” from state tobacco revenue settlement funds to match a generous offer of support from private foundations. He says this would protect Detroit pensioners and the Detroit Institute of Arts collection.

Snyder says this is not a “bailout” but a “settlement” because a bailout (I am paraphrasing) involves giving money to bankers and not getting anything in return. This seems a bit of a stretch.’s second entry on “bailout” reads: “an instance of coming to the rescue, especially financially: a government bailout of a large company.” (emphasis in the original.)

Comes at Expense of Rest of State

Last week, I listed just some of the reasons Detroit should not be bailed out. Among them, taking precious state resources that could be used for other state spending (road funding, for example) to give to Detroit is fundamentally unfair to all those Michigan residents who were never part of the Detroit equation. It requires residents statewide to give up something of value (future government services or tax cuts) to cover the bad policy decisions and mismanagement of Detroit.

At the same press conference, Senate Majority Randy Richardville (R-Monroe) tried to deflect such criticisms, arguing in effect that this is a Michigan problem, not just a Detroit one. Perhaps, but it still leaves people outside the city paying for Detroit’s past spending (and promised spending to pensioners) while not having ever benefited from that spending.

Compounds Problems

The reality is that with plenty of help from enablers in Lansing (Michigan’s state capital), Wall Street, unions and many more, Detroit leaders so thoroughly fouled their own nest that the city now finds itself in federal bankruptcy court. State taxpayers have already shelled out plenty to support the city’s fiscal malpractice, and that wasn’t fair. Piling another $350 million now just compounds the unfairness.

The financial burden for cleaning up this mess should fall more closely on those who made it. The solution isn’t more state taxpayer subsidies and bailouts but aggressively selling off existing assets, contracting out core services, ending unnecessary ones, and creating a business climate that welcomes real entrepreneurs and investors rather than chasing them away. 

Used with permission of the Mackinac Center for Public Policy.