"Everyone will say, 'Oh well, it's Detroit. I thought it was already in bankruptcy,' " said Michigan State University economist Eric Scorsone. "But Detroit is not unique. It's the same in Chicago and New York and San Diego and San Jose. It's a lot of major cities in this country. They may not be as extreme as Detroit, but a lot of them face the same problems."
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The bankruptcy filing follows a decades-long decline of a city that prospered through much of the last century as the capital of U.S. manufacturing. But as that industrial base has declined, so to have the city's fortunes.
Detroit has endured booms and busts in the past. Even as the auto industry has roared back to life since the Great Recession, the economic recovery has left the Motor City in its rear-view mirror.
Though unemployment has fallen from a peak of nearly 28 percent in 2009, some 16.3 percent of Detroit workers are still without a paycheck. As a result, income tax revenues have fallen 30 percent in the last decade. Meanwhile, the national recovery in home prices has yet to spread to Detroit. Property taxes are 20 percent lower than 2008 levels.
As tax revenues have shrunk, the cost of maintaining city services has grown. Tens of thousands of abandoned buildings and vacant lots, and a resulting increase in fires and crime, have increased the burden on firefighters and police. Some 40 percent of the city's streetlights don't work.
"There's no way Detroit can afford to service 140 square miles anymore," said Scorsone. "So for parts of the city, if your streetlight's out they're not going to fix it. If your road has massive potholes, it's going to turn it to gravel. It's that stark."
Many residents have responded by simply moving away. Once American's fourth-largest city, Detroit's population has fallen by a quarter since 2000. A shrinking population further erodes the tax base, intensifying the budget squeeze.