Water Has A Very Special Attribute In Southeast Michigan
You probably think the water which comes out of the taps in your house is for drinking and washing. You would be wrong. Michigan drinking water is first and foremost a mechanism for Michigan politicians to evade limits imposed upon them by the Headlee Amendment. You probably think Michigan water systems have quality as their top concern. You would be wrong. Michigan water departments are directed to maximize revenue by their political masters. These unfortunate facts are the genesis of Flint’s sorry water quality.
Michigan’s lefties and the ignorati in our media have fabricated a popular history of the Flint water situation which begins with Governor Snyder and his emergency managers on 25 April 2014, the date Flint started drawing its drinking water from the Flint River. Craven emergency managers appointed by Governor Snyder plotted to poison Flint residents to save a few bucks. The truth is rather different.
The history of this calamity actually begins in 1978, when the Headlee Amendment to Michigan’s Constitution was passed by outraged Michigan voters.
The late 1970’s in Michigan was a very unhappy period. Michigan lead the nation in unemployment most of the decade as our manufacturing industries failed to adjust to the huge oil price surge in 1973. Scorching inflation was created by an inept Federal government. Michigan politicians at all levels jacked up taxes in response to a 1974 constitutional amendment which removed the sales tax from groceries, prescriptions, and nonalcoholic beverages. Personal and business income taxes increased at their highest rates, in real (inflation adjusted) terms, ever. Inflation and aggressive assessments drove property taxes up at their highest ever real rates. Michigan residents were hard pressed.
This was a rude surprise to Michigan’s taxpayers who had approved a state lottery in 1972. This lottery was deceitfully sold to Michigan’s voters as a painless future source of generous education funding. Michigan’s politicians simply diverted funds previously applied to education as lottery revenues developed. The 1970’s Michigan government revenue gusher was directed into cost of living adjustments and enhanced contracts for government employees.
Into this morass stepped a real Michigan political giant, Richard H. Headlee. He proposed an amendment to the Michigan Constitution which limited both state and local taxation, capped property assessments, regulated intergovernmental funds transfers, and require voter approval of new or increased taxes. The Headlee Amendment was passed on November 7th and went into effect on December 23rd.
Headlee’s carefully crafted amendment restrained government growth for a while, but Michigan’s devious politicians quickly recast taxes as ‘fees’. Recasting taxes as fees had an additional benefit: it allowed some units of government to charge other units of government! Detroit Water & Sewerage Department lead this subversion, under the protection and guidance of U.S. District Judge John Feikens. Pursuant to the settlement of a 1976 EPA lawsuit, DW&SD established a ‘stormwater fee’ to augment revenues from water sales and sewage charges based on cost of operations. DW&SD even managed to charge both the State of Michigan and Wayne County their stormwater fee.
While DW&SD could not apply their parasitic stormwater fees to units of governments beyond Detroit’s boundaries, it could jack up their water and sewerage charges. It did so, relentlessly. DW&SD adopted revenue target pricing totally divorced from the actual water cost long before the Wall Street weasels in the pharmaceutical industry did. Martin Shkreli became a national pariah for jacking up the price of a cancer drug by 5,000%. He was only adopting DW&SD’s revenue target pricing system in a compressed time frame. His only mistake was not having secured the protection of U.S. District Judge John Feikens.
DW&SD’s predation upon its fellow units of government created a wicked backlash by the 1990’s. The prey started filing lawsuits and began planning their own water systems. Their lawsuits failed in the face of DW&SD’s U.S. District Court protection, and it was impossible to make a financial case to create substitute water utilities at that time. But you could read between the lines of suburban politicians’ comments; they really wanted to get in on DW&SD’s gravy train.
Southeastern Michigan water economics changed in the 2000’s. While suburban lawsuits continued to be frustrated by U.S. District Court protection, the greed of DW&SD had reached the point that independent water utilities became cost effective. Kwame mistakenly pushed DW&SD water prices up too fast so his buddy Bobby Ferguson could plunder enough to satisfy the entire Kilpatrick Family Enterprise. Plunder happens to be U.S. District Court approved required revenue which is rolled into those DW&SD water prices. Local politicians could now cost justify creating complete water utilities from scratch.
Genesee, Lapeer, and Sanilac politicians conceived the Karegnondi Water Authority to supply lower cost water throughout their counties. By 2010, the cities of Flint and Lapeer were on board, along with Consumers Energy. The KWA was incorporated with a fully developed, MDEQ approved plan to construct a drinking water delivery system originating at Lake Huron. DW&SD mounted a furious media campaign to frustrate the KWA and got surprising support from L. Brooks Patterson. DW&SD let him know that they would charge Oakland County for the revenue lost from sales to the northern counties.
In 2013, matters came to a head as legal contracts were finalized and KWA broke ground on their system. Flint Emergency Manager Ed Kurtz signed a water purchase agreement with KWA and DW&SD immediately responded with a one year termination notice in April. This created a gap in water supply between April 2014 and Summer 2016, when the KWA system is expected to be finished.
Flint was quite willing to extend their purchases of DW&SD water until the KWA system was on line, but DW&SD was determined to derail KWA in its entirety. $ 22 million in obscenely profitable annual revenue for DW&SD was at stake. Flint’s negotiations with DW&SD went nowhere. DW&SD was determined to push an all or nothing deal. Flint was either going to sign up for another 30 years of annual price increases satisfying DW&SD’s revenue targets, or they would go dry.
Flint had full approval for drawing water from the Flint River. They had demonstrated this option every December for 20 days going back to 1963. After months of negotiating with an intransigent DW&SD, Flint opted to go back to the Flint River until the KWA delivery system was commissioned. Flint was bankrupt and not in a position to subsidize Detroit. Flint residents were already up in arms over the cost of their DW&SD originated water and many were refusing to pay their bills.
Up to this point, everyone involved – other than DW&SD and L. Brooks Patterson – had the best interests of Flint residents at heart. After this point, epic government negligence transforms Flint water into a statewide liability. A very expensive liability which all Michigan taxpayers will share.