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Is It Fair To Compare Memphis to Detroit?

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(Detroit, MI) Detroit filed for bankruptcy Thursday, becoming the nation’s largest public sector bankruptcy.

The bankruptcy did not surprise many due to the terrible financial situation in the city.

Michigan Gov. Rick Snyder said the financial condition of the city left him no choice. 38% of the city’s budget is being spent on costs like pensions and debt service. Police take almost an hour to respond to calls, compared to a national average of 11 minutes. 40% of street lights in the city are turned off.

Some people worry Memphis is on a dangerous path of its own due to debt loads, high city employee costs, a declining property tax base, crumbling infrastructure, and crime problems.

The State of Tennessee recently sent two letters to the city warning it to reduce and better manage its debt.

The recent declines at the Memphis airport have also worried some people.

Others say the city is much more stable and not as dependent on one industry as Detroit has been with the auto industry.  An article from the urban advocacy group Smart City Memphis points out:

  • The property tax rate in Detroit is three times higher than Memphis.
  • A family of three earning $50,000 in Detroit pays 11.4% of its earnings in taxes compared to 5.9% in Memphis.
  • Detroit’s poverty rate is 37% higher than Memphis.
  • House values in Detroit are 46% lower than Memphis.
  • Median family income in Detroit is 20% lower than Memphis.
  • Over the past decade, Detroit has lost 100,000 more people than New Orleans did after Katrina, 237,500.
  • While Detroit has 50,000 more people than Memphis, its city budget is five times higher than Memphis, about $3 billion.
  • Detroit has twice as many city employees.
  • Detroit’s bonds, used to pay for capital improvement projects, are below investment grade.

Memphis Mayor A C Wharton said at an afternoon news conference that Memphis is in much better financial shape and is not dependent on a single industry like Detroit.  He said the comparison just isn’t correct.

WREG News Channel 3’s Wayne Carter will have more this evening on News Channel 3 and