Municipal Raiders of Flint Worth Remembering for Ludington's Own

Not too surprisingly, many years before the Flint water crisis began the city's leaders and decision makers had robbed from dedicated funds made to support the proper running of water utilities, including one that was specifically designed to provide uncontaminated water to residents. 

It began earlier this century, when Flint's council, undoubtedly at the urging of their bean-counters, started raiding funds here and there to pay other funds that were either increasing dramatically (like pension, health care, and other employee entitlements) or failing to hold their own.  By 2007, they had to prepare a plan to cut these looming deficits down because their financiers of loans from the State of Michigan (where they also raided) required such.  The plan eventually made projected that by 2010 they would spend $9.1 million more than they would take in (a gap which would actually be 5.5 million more, a gap which is slightly higher than the City of Ludington's annual budget).

The 2008 plan projected that the deficit would be eliminated by 2014, in 2010, that projection was pushed up 16 more years to 2030  as noted in this 2011 report which led to Flint being assigned an Emergency Financial Manager (EFM) from the state to fix the fiscal mismanagement. 

Flint officials would like to foist all the problems to the EFM and Michigan's Governor Rick Snyder for utilizing the controversial intervention method, but just ten days ago (Sept. 12) the Sixth Federal Circuit Court of Appeals unanimously upheld the law behind using EFMs to save cities from financial ruin, saying: 

“The emergency manager’s powers may be vast, but so are the problems in financially distressed localities, and the elected officials of those localities are most often the ones who — through the exercise of their powers — led the localities into their difficult situations.”

The state review team in 2011 concluded after seeing a pattern through the previous four years that there was a “lack of political will among a succession of city officials to confront reality and render difficult, but necessary, financial decisions.”.  Among these: 

In 2007-08, the gap between projected revenue and actual spending was $8.8 million. Specifically, the city council was $4.2 million short in estimating how much revenue it would collect. It also budgeted $4.6 million less for expenditures than the city wound up spending.

Between 2008 to 2010, Flint officials consistently overestimated the city’s projected revenues and underestimated its spending by millions of dollars each year. 

From 2009 to 2011, Flint officials took about $10 million from water service operations to pay for general city operations. These raids contributed to a growing hole in the city water fund.

The raids persisted even as the water department was dealing with its own imbalances. For example, the water fund had dug a $5.8 million deficit-spending hole by 2010, which deepened to $9.0 million in 2011.

The state review discovered that city officials had been alerted to budget shortfalls on a monthly basis — but up to six months would pass before they would act.  This led to the review team characterizing the behavior as  “wholly inconsistent” with the state law that requires the “adoption of realistic budgets and their timely amendment as necessary to maintain them.”

Smart management of their water utilities could have saved Ludington citizens from the $30 million price tag (for now) to be used for upgrading their water and wastewater facilities.  The money the city charges for "Readiness to serve" is supposed to go exclusively to operation and maintenance charges.  The millions of dollars the city has taken in has not.  Over the next few years, sewer bills will double their rates for citizens of Ludington and beyond, while water rates (which are already over 60% higher for citizens than we charge those living in PM Township) will go up significantly greater than the inflation rate.

Meanwhile, even when the $30 million of work is done, paid for by onerously increasing your bills, we will still substantially have facilities built over 40 years ago to depend on delivering fresh water and treating our wastewater with a questionable infrastructure of conduits, miles of which will still be over 100 years old. 

And don't ever believe that your bills will go back down once you pay off this bond-age we find ourselves in, because that's when our future leaders (if they have the same ethics as those we currently have) will raid those funds to either reward themselves with more perquisites or use as 'mad money' for other projects outside their realm, as Flint has done.  See more here.

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Another city run into the ground by liberals.  Looks like Michigan taxpayers are going to be bailing Flint out of this mess. Flint thinks we owe them. Mismanagement, corruption and incompetence are the corner stones for cities like Flint and Detroit and that appears to be the path Ludington is heading down. Ludington may soon be on the EFM list.

I think Scottville is more likely to go to the EFM list first due to their various factors that have had them on the cusp, which would hopefully have a 'wake up' effect on Ludington.  Former Scottville Commissioner Edward Hahn's findings and ideas will likely be justified if they do.

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