Headlee Evasion Caused Flint’s Water Quality Fiasco

Water Has A Very Special Attribute In Southeast Michigan

Water is Money Image 6You 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. DW&SD Logo Image 2Pursuant 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.

Kwame Image 2Southeastern 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.

Some of the U.S. District Court Required Revenue Found In Bobby Ferguson's Apartment

Some of the U.S. District Court Required Revenue Found In Bobby Ferguson’s Apartment

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 Water ImageFlint 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.

You Betcha! (26)Nuh Uh.(3)

  20 comments for “Headlee Evasion Caused Flint’s Water Quality Fiasco

  1. JD
    January 20, 2016 at 9:12 pm

    "...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..."

    I would offer that the truth is somewhere in between. Michiganders 'apparently' don't feel that the concept of simple bankruptcy should ever apply to them. They elect leaders in BOTH parties who not only consider the concept "blasphemy" but bailouts of all magnitudes (whether thy be car companies, public pensions or mammoth cities/infrastructures) a religion.

    While i respect the facts presented, we conservatives seem to forget that we have drunk their KoolAid (public pensions) many times as well without demanding that they be throw in to the same proceedings when they can...and when they cannot?..pushing HARD for self-sacrificing constitutional change that would (finally) put our children on equal ground.

    Those who put these large cities under (emergency) state control had a responsibility to mange them as the crippled lunatic fringe time bombs that they were. They made the conscious choice to not put them out of their misery, to protect the citizenry while they were at it AND TO TAKE OWNERSHIP OF WHATEVER HAPPENED AS THEY DEFIED EVERY REASONABLE SCHOOL OF THOUGHT ON THE PLANET DEMANDING OTHERWISE.

    The rewriting of history has begun and (sorry but) I'm not letting either side off the hook for this one.

    You Betcha! (4)Nuh Uh.(3)
    • 10x25MM
      January 20, 2016 at 9:37 pm

      The sequel to this post will cover bureaucratic capture of Michigan politicians. The epic government negligence which unfolded after April 25, 2014. Too long for one post.

      You Betcha! (7)Nuh Uh.(1)
  2. Sue Schwartz
    January 21, 2016 at 8:16 am

    I would have thought that the dangling carrots in the Headlee Amendment would have taught us lessons. All it was was hysterical reactions to high oil prices and a bait and switch to boot. Ironic isn't it that all the natural water, the abundance of aquifers, lakes rivers, etc., in MI in this day and age, we're paying for bottled water and the charity solution to this is send bottled water to Flint-- Really!!!!!

    The solution is black and white--there are whole house filter systems out there that cost less than $2000--and are excellent. 5000 homes x $2000 is a lot cheaper than what has been planned. Hospitals really using unfiltered tap water on their patients? when large filter systems should have been installed. BTW this should be a claim to their insurance company not to the taxpayers. Schools too--

    While the EPA fights for air quality, they've ignored the toxic pollution of our water--hell they're water polluters too. So what's the lesson here? YOU ARE RESPONSIBLE FOR THE SAFETY OF YOURSELF AND YOUR FAMILY and relying on government will kill you!

    You Betcha! (10)Nuh Uh.(2)
    • Jason
      January 21, 2016 at 11:42 am

      You said:

      " YOU ARE RESPONSIBLE FOR THE SAFETY OF YOURSELF AND YOUR FAMILY and relying on government will kill you!"

      Great summary.

      You Betcha! (10)Nuh Uh.(0)
  3. JD
    January 21, 2016 at 8:59 am

    You have brought us a great series and the definitive analysis to date for our children's future research analysis. It would nice if the following could be worked in to set the record straight:

    Snyder changed very little in terms of significant management head-rolling when he was given the job. He rewarded 8 years of fielding the absolutely worst recruiting class in American history..twice. The deck was merely shuffled/shuffled again in every single legacy position including his #1 job...keeping terrorists from migrating here AND effectively shifting sparse resources to effectively harass those here already so that their forced relocation became some other state's problem (in the absence of federal help). He punted when 'leaders' needed to go or to be demoted in to obscurity (as Granholm obviously didn't)..we said 'meh'. (save here)...and the rest, as they say, is history.

    Historic events have been discounted purposely.
    The behind-the-scenes travesties during Right to Work, what never happened afterwards and how this one event over 3 days negatively effected (forever) our children's ability/willingness to assemble freely and speak the same is no different than what is happening right now in Flint. We are allowing bit players in these events (I was right beside Crowder under that tent) to tell the story. History is being managed on every level and at every turn so that our children never receive the true story.

    The 'bit' players in this sad story are much more important than the headliners.
    Who kept the records at both locations?...where are they residing TODAY and who is FOIAing them?...who handles water relations with the GM plant that discovered this well over a year ago (or earlier_?...why are most of us hearing from our Republican legislators only AFTER Snyder's speech this week?...(the list goes on). This grassroots movement has had no interest whatsoever in documenting/archiving exactly who works where, what they do for a living in local or state government, what even their 'high point' has been for representative government (there careers) and most importantly whether they are a slave to their masters or not.

    If we are not concentrating on those who do OUR every day work or those who refuse to meet with their employers (is) after they are given the job...it is not hard to imagine little children being poisoned in Flint or anywhere else.

    You Betcha! (1)Nuh Uh.(0)
    • JD
      January 21, 2016 at 9:03 am

      (sorry for the grammatical errors...I should have looked twice before posting)

      You Betcha! (0)Nuh Uh.(0)
  4. JD
    January 21, 2016 at 6:07 pm

    Keep in mind also that this far reaching historic (water) plan is due any day now from the DEQ (as well as the other Big 3: MEDC, DNR, MDARD):
    This (if agreed to) will have long term consequences for everybody and has been on absolutely nobody's radar for inexplicable reasons...especially with the Flint issue in full swing.
    Read it and weep.

    You Betcha! (1)Nuh Uh.(0)
  5. January 22, 2016 at 1:29 am

    When people look at this ... hopefully the light turns on in the darkest corners of their minds. This is being repeated all over the country. Different versions of the same scamming story about a government our forefathers warned about.
    Additionally "Constitutional rights" are being misconstrued as granted by Government (when the truth is Rights are granted @birth. Officially endowed by our creators.)

    You Betcha! (3)Nuh Uh.(0)
  6. Bill Bailey
    January 23, 2016 at 6:34 am

    It’s big government.
    Flint and Detroit both mismanaged and diminished to rubble and poverty via decades of sinister Democrat central planners invoking social justice following the liberal agenda leading the once wealthy and towering manufacturing meccas down the low road to ruin.
    It wasn’t the private sector that failed Flint and Detroit—it was their over bloated ideological criminal governments!
    But the State failed Flint and Detroit too. Because the State has invoked higher taxes, legislated a nightmare of regulations, grown bureaucracy and created an energy monopoly that has increased energy cost to manufacture in MI. The auto industry as well as other manufacturing was forced to flee MI to stay in business! Sadly many companies simply shutdown unable to survive any longer. The extortion known as Prevailing Wage remains law as our State government continues to write bias bills legislated into laws based on what lobbyist spoon feeds them the most money. As corrupt as the governments of Flint and Detroit were and maybe still are—the State Government makes them look saintly! It really is a criminal enterprise!
    Any wonder MI to date is still a high outbound state. More people are moving out than moving in.
    And our over regulatory ever growing, over reaching Federal government can own this shame too. They manage to make our state government look honest. And that is not an easy thing to do! Obama’s EPA has forced the closure of 25 coal-fired power plants here in MI alone that will go offline within the next 48 months.
    But know that the Gov. of MI “Rick Snyder” is a central planner. He’s in no way a conservative. He has grown the MI budget near 10 billion dollars. He has increased taxes. He believes in climate change. He does not respect private property rights and continues to waste money on Main Street and Place Making programs. He believes it's government's role to be micro managing every aspect of life in MI. He too believes in the liberal agenda. He’s a progressive. In his mind he believes the governments in Flint and Detroit failed government not the people, and so he was eager to step into both cities with his emergency managers to take control and prove that indeed an all-powerful correctly run government is the answer. He trust government is the only problem solver. But not only is he wrong—his actions made things much worse.
    And what was Gov. Snyder’s answer that he gave during his State of The State speech, his remedy to the Flint water crisis that government caused, that he offered us? He said he would be creating a new commission, another bureau, to make sure this never happens again. So his answer to a problem caused by government is to create even more government!
    Big government lovin’ RINO Rick is indeed to share some of the blame imho. “Government is not a solution to our problem--government is the problem.” ~Ronald Reagan

    You Betcha! (4)Nuh Uh.(0)
    • JD
      January 23, 2016 at 5:40 pm

      Well written and accurate.
      I would add one more factor to the equation...us.
      I can remember this all starting (in part) from our (cough0 'outrage' that legislators were hiding from us during the August break.
      The only fear that those mentioned above have ever had is us.

      I have no idea what it has been like every year since in August or at any other legislative break across this great state full of true patriots.

      In my region?...we haven't even been able to become excited about forcing these people to show their faces on public or take a position on anything of consequence.

      If that isn't 99.9% of the problem...I don't know what is.

      You Betcha! (0)Nuh Uh.(0)

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