Financing transformation of the municipality

Abstract

The article analyzes the causes of bankruptcy of the city of Detroit in the USA. It has been shown that the causes can be divided into two types the external – in the automotive industry, the transfer of business to other countries and the internal i.e. the lack of action by the city authorities in order to ensure the safety of residents, the lack of effective eliminating of racial conflicts, delayed searches for new investors, which brought the excessive debt. The article shows that the very difficult situation in Detroit is different from the difficulties of Polish towns in Lower, Upper Silesia, agglomeration of Lodz, the Tri-City, because in these cities and regions, there has been a permanent reduction in population by more than half as it was Detroit. Indicated proposals for solutions on how to proceed when the number of entrepreneurs is decreasing. In such cases, the city should expect substantive support, organizational and financial resources from the government administration in the development strategies of survival, development and fund it. It also pointed out that the measures to prevent the difficulties in the cities should be taken in advance, because then there is a chance for a smooth transition of transformation. In such operations the city should not also be alone but must be able to expect the support in such areas like the verification of agreed action plan in the respect of assumptions about the global situation and the partial financial support from the central budget. For introduction of the proposed solutions there is no need to create separate law regulations. It is sufficient in this regard, to add some units of text in the Public Finance Act.