DETROIT – With the city of Detroit facing potential bankruptcy, Mayor Dave Bing vowed to make significant cuts to balance the city’s budget. The city hopes to avoid having an emergency financial manager takeover of the city.
Snyder earlier this year signed a controversial law allowing state appointed emergency managers to take over everything from school districts to entire municipalities. Opponents of the law are gathering signatures in an attempt to repeal it. But Bing warned that Detroit could be subject to the law if changes are not made.
“Simply put, our city is in a financial crisis and city government is broken,” Bing said Wednesday night at Detroit’s Northwest Activity Center. ” The reality we’re facing is simple: if we continue down the same path, we will lose the ability to control our own destiny.
“Let me make one thing perfectly clear: I don’t want an emergency manager making decisions for my city.”
The city faces a potential disaster if cuts aren’t made to certain city services. Detroit is facing a $45 million cash shortfall by the end of the 2012 fiscal year next June, and the city will run completely out of money by April of 2012.
Bing urged the police and fire departments to accept a 10 percent pay cut, which is similar to the ones that other city employees have accepted. He noted that he was not planning on cutting the number of officers, and the pay cut would save the city nearly $13 million.
“You want a safe city and you want officers on the street,” Bing said during the televised speech. “Public safety is the most important service we provide. I will not allow police and fire to be gutted. I will not allow criminals free reign over our city.”
Crime in Detroit has actually dropped by 10 percent, but homicides have risen by nearly 20 percent this year. The police force has been stretched dangerously thin over the last decade; with many officers opting for retirement or resignation and the city has not been able to afford to replace them.
“Instead of laying off officers, once these people retire, we’re not allowed to replace them,” a veteran police officer said in August. “It’s not quite as bad as laying people off, but we don’t have people to back us up. But even when we were hiring, there were not enough who were able to meet the criteria.”
Bing also announced Wednesday that he plans to take drastic measure to fix Detroit’s beleaguered bus system. Bing eliminated all vacation days for the city’s bus mechanics, instructing them to work around the clock to fix nearly 100 disabled city buses.
“Over the last few months, I’ve heard numerous stories of people who have been left out in the street and in the dark for hours waiting for buses,” Bing said. “We simply have to do a better job. I won’t stand here and tell you that we have the ability to fix everything in the short term.”
Also part of the bus reforms will be “enhanced security” on the buses by Detroit Police, in the wake of an incident earlier this month involving a passenger assaulting a driver. Bing also announced that the city is bringing in a new management firm to operate the bus system, which currently costs the city $100 million per year.
“For decades the city has refused to face its fiscal reality,” said Bing, who also announced that the city is set to receive 47 new buses by March 2012 thanks to federal stimulus money. “We cannot continue to operate that way. City government has to work within a budget.”
An audit by Ernst & Young, which was ordered by the city and paid for with taxpayer money, showed that the city’s finances are so thin that even laying off 2,200 employees would delay insolvency only until next July. The audit, which led Bing to suggest he would consider becoming the emergency financial manager if asked to do so by Gov. Rick Snyder, also showed that the city is in jeopardy of running out of money as soon as next April if significant cuts are not made.
“Literally, these conversations (about potential insolvency) had to begin yesterday, and they have,” said Detroit City Councilman James Tate. “What you heard tonight were a lot of proposals. Now it’s time to take those proposals into action. Hopefully we’ll get everyone involved, willing to work with the city government.”
Take was one of just three council members at the speech – the others were Andre Spivey and JoAnn Watson. Tate, who is in his first term on the council, feels that it is time for the city to face facts about the financial situation, but also is looking for more action from the mayor.
“I want to really have an opportunity to go back and start peeling back the layers and seeing exactly what this looks like,” Tate said. “Again, we’re looking at right now having to get these unions to bargain and actually say this is what we’re looking to do. I didn’t hear anything that was guaranteed.”
The city has been battling with the public sector unions over concessions since Bing took office in 2009, with members of Local 207 protesting outside of his speech. Bing has presented them with a 10 percent pay cut, elimination of vacation days, pension reforms, and layoffs as attempts to pair down the deficit.
“I know that government has gone to the unions time and again asking for concessions in tough times,” Bing said. “We simply cannot afford to provide the rich benefit packages that our employees have enjoyed for decades.
“This is not an attack on labor or our dedicated employees. The private sector, including the auto industry, was forced to accept tough cuts to survive.”
Bing also said that he plans to ask Gov. Snyder to repeal a 1998 agreement with the state legislature that saw Detroit lower its city taxes in exchange for an equal share of state revenue. The city never received that money and Bing estimated that the city lost more than $220 million.
“That loss is enough to eliminate Detroit’s current structural deficit and compensate for this fiscal year’s shortfall,” Bing said. “Detroit is critical to the regions economic success. Without a strong urban core, surrounding communities in Oakland, Wayne, and Macomb County will also suffer.
“If we are truly serious about competing as a region, it is time to stand together and put our collective political will and power into action. If we want Detroit to succeed, all of us have to put some skin in the game.”
The city council was so concerned about the budget issue that they cancelled their annual six-week Christmas recess. The recess, which was scheduled to run from Nov. 23 to Jan. 8, will now be spent trying to fix this budget crisis, which becomes more dire as the days progress.
“Time’s not on our side,” Tate said. “We look at the track record we’ve had with negotiations, and that’s not on our side either. We’ve got to look at some of the things we can do unilaterally and work on those things.
“We’d be foolish not to look at what has been presented tonight, and not go back and re-evaluate with our fiscal analyst and the attorney general to see if there additional areas where we could find efficiencies. What we heard tonight was the start of a long, long conversation.”
Bing also announced that he was transferring control of the city’s public lighting to a private company. In the short term, Bing and the city council worked out a deal to get 5,000 city lights back on by February, with DTE Energy replacing 3,000 of the lights.
“Spending money to fix the lights, get the buses running, and maintain public safety requires sacrifice in other areas,” Bing said. “If we don’t, we know the risk. Avoiding that fate (EFM) means supporting change and sacrifice that won’t be easy.”
Tate felt that the speech wasn’t sobering enough for the public, who still lives in denial of the city’s financial woes. He said that he has had to explain to residents bluntly how bad the financial situation is.
“There’s going to be some real depletion of service in some areas,” Tate said. “We’re looking at the financial situation we’re in right now, there’s no other way to cut it. We have to be completely frank with everyone.
“If we don’t make changes, we will run out of money by April, and we very well may run out of money prior to that.”
Bing, and the council know what is at stake for the city if changes aren’t made. Detroit would be the the first major U.S. city to file for bankruptcy, a fate that has recently befallen Harrisburg, Pa. and Vallejo, Calif.
“All of us have something to contribute to this effort,” Bing said. “The apathy that has paralyzed Detroit for decades ends tonight.”