Just a few years before the crisis unleashed in Flint, Michigan, by local, state, and federal officials in the form of contaminated drinking water, city officials were draining a dedicated municipal water fund and diverting it to other uses. The diversion continued while the city water system used its revenues to fund unrelated city spending. In 2011, the water fund accumulated a $9 million deficit. Late last year, after switching from water supplied by the city of Detroit to a source in the nearby Flint River, the city water system supplied drinking water contaminated with toxic levels of lead, prompting since then investigations, law suits, a visit from President Obama, and appeals to Congress for funding at the level of $1 billion.
These findings were made by a state review team that looked at Flint's book. It was thus that the team recommended that an emergency manager by appointed by the governor of the State of Michigan to appoint an emergency manager, in accordance with state law, to take control of the city's faltering financial situation. That review is five years old, but it is gaining currency because it offers a glimpse at the reasoning city officials used in the run up to Flint's water crisis.
The review team examined Flint’s financial condition for Oct.-Nov. 2011. It discovered that Flint's total debt had bounded from $1.5 million in 2007 to $25.7 million in 2011. In addition, the study found that Flint’s annual revenues rose from $104.5 million at the start of the period to $109.0 million in 2011.
Flint's debt came as a result of the failure of the city council and mayor to balance the city’s budget and control spending for five years.
From 2009 to 2011, Flint took in approximately $10 million from water service operations to pay for general city operations. These funding raids meant a growing drain on the cash-strapped city's water fund, which was intended for such things as modernization, safety, construction, and repair. These continue even while the water department dealt with its own imbalances. For example, the water fund had a $5.8 million deficit-spending hole by 2010, which grew to $9.0 million in 2011.
City officials also tapped the city's sewage disposal fund, diverting $61 million to general city operations from 2001 to 2011.
According to the Mackinac Center, the city’s leaders broke state road funding laws by taking just over $1.0 million from the local street fund. "That money comes from state and federal road funding grants, which come with a requirement they be used for streets and roads".
The review team from the State of Michigan said that the diversion of officials funds is harmful. “Simply put,” it said, “these other funds could lack sufficient cash to permit the performance of the statutory tasks assigned to them, to provide preventative maintenance or to plan for future replacement of equipment.”
The provision of clean, safe, drinking water is the main task of the city water department and fund.
Professor Marc Edwards of Virginia Tech -- who has testified before Congress on the crisis and remains an active participant in the cleanup -- has been quoted saying, that the city "may have no choice, but to borrow from tomorrow, to pay for today."
Edwards added, “The simple story, is that the lead poisonings arose from the MDEQ’s (Michigan Department of Environmental Quality) failure to implement corrosion control as the law requires. That is not a decision made by a governor, a mayor, or an emergency manager. The more complicated story, which certainly factors into the climate that allowed this problem to occur and continue as long as it did, is whether or not water is a basic right? What will we do, for the American cities or towns, that cannot afford to maintain, much less upgrade their water infrastructure?” Water is a human right, Edwards avers.
Flint has had a succession of mayors and city council members from the Democratic Party. In addition, it has had a succession of Democrats in the U.S. House of Representatives going back to the 1960s. State control was relinquished this year. Currently, Congress is debating over the provision of additional millions of dollars of federal dollars to address the water crisis in Flint and the required lead remediation. U.S. Rep. Dan Kildee (D-MI) suggested on the floor of the House this week that racism was at the heart of Republicans' alleged reluctance to fund federal assistance to Flint. His uncle, Dale Kildee, was one of the longest serving Congressman in recent history, serving from 1977 until 2013. It was during this period that Flint was transformed from its status as a haven for goodpaying bluecollar jobs at General Motors auto plants and suppliers, to its current malaise that has come from decades of outmigration, unemployment, plant closures, murder, bankruptcies, and property abandonment.