I'm kind of clueless as to the reason for Mayor Dave Bing's big speech on the city's finances last week. Not that our cash-strapped situation isn't worth addressing. But immediately after the Nov. 16 speech, a City Council member disavowed it, saying the mayor's suggestions had not gone far enough in addressing the budget shortfall. The governor released a cryptic response, saying that he expected the city to submit to a "preliminary financial review" soon. A preliminary financial review is a step in the process of an emergency manager possibly taking over the city.
It seemed that the mayor was out there flapping in the wind alone. At a time when I expected a show of unity — after all, our current council is supposedly the one that was going to get along with the mayor — Bing was forging ahead without the support of council or the governor.
Was it ego that made him do it? Was it because his agenda is different than that of others? Has his impasse with police and firefighter unions become personal? Indeed, his unilateral decision to present the plan to the public is what you'd expect from the emergency manager he threatens is coming if we don't do his bidding.
Consider this: A committee made up of City Council President Pro Tem Gary Brown, Councilmember Ken Cockrel and representatives from the mayor's office had been meeting for about three weeks to hammer out this plan. They met as recently as two days before Bing's speech.
But that night, "I was surprised to hear he was going to be doing this speech," Cockrel says. "We have all been participating in a joint committee to come up with a joint plan. Frankly I was surprised to hear on Monday night that he was giving the speech on Wednesday. The plan we have been working on has not been finished and the recommendations have not been finalized. That's the sort of thing his people should have brought to City Council. It was a little bizarre to me that he even did the speech, although some of it was along the line of things we've been discussing."
Two other council members didn't return my calls, although they all had plenty to say at a Monday morning council meeting. The biggest difference with Bing is the amount of layoffs necessary to achieve a balanced budget. In his speech Bing called for an unspecified number of city employee layoffs. Then, in the days following, he said there would be 1,000 layoffs by Feb. 1.
"Any plan that doesn't start with 1,500 layoffs is not going to get it done," says Cockrel. "It could go up to 2,300. He's got to come to grips with this. The other thing is that police and fire cannot be sacred cows. He didn't say there wouldn't be layoffs in those areas, but he came pretty damn close."
At Monday's meeting, council looked at how 1,700 or 2,300 layoffs would affect the budget and the city. In those scenarios they considered as many as 500 police and firefighter layoffs. And some questioned waiting until Feb. 1.
It may seem like a contest to see who can be the biggest Grinch, but council says that Bing's numbers don't add up. They say that 1,700 layoffs would balance the budget if police and fire unions accept 10 percent pay cuts and pay for 30 percent of their health care. If the city lays off 2,300, the budget would be balanced even if the pay cuts don't materialize.
"We have to adopt a strategy that is not dependent on getting givebacks from unions and retirees," says Cockrel. "It's better to just try to structure a strategy that says we're going to do this if we don't get anything at all from the unions. Then anything you get from them is just gravy."
One thing council agrees with, and something council member JoAnn Watson has been out front on, is going after the $220 million Bing said the state owes the city.
"Us standing together with the mayor, that's a hallelujah moment," says Watson. "We missed it. We need to work out of the same playbook. The citizens need hope. ... We got the mayor putting it on the agenda. The city is still abiding by the agreement that the state has reneged on."
The $220 million stems from a 1998 agreement between the Archer and Engler administrations — Public Act 532, addressing revenue sharing, which was tie-barred to Public Act 500, addressing Detroit tax reductions. Essentially the city agreed to lower its income tax for residents by 0.1 percent each year from 1998 to 2007. That would drop the income tax from 3 percent to 2 percent. The state would in turn share a larger percentage of revenues from sales taxes. In fiscal year 1998 that amount came to $333.9 million for Detroit. However two things happened: A couple of months before Engler left office in 2003, the Legislature changed the revenue sharing formula so that Detroit got less; and the economy started tanking so the state had financial problems of its own, including lower sales tax revenue. Detroit got $220 million less than anticipated through fiscal year 2007.
Another piece of the argument is that Detroit's income tax never got down to 2 percent — it now rests at 2.5 percent. However, part of PA500 that said if Detroit could prove it qualified for three out of four provisions it didn't have to roll back its taxes. Those provisions are: If city unemployment exceeds the state average; if income tax collections are lower than the state average; if property tax collections are less than the state average; and if the city could prove it had no savings. We pretty much fit the bill on all counts.
Another point is that when the state Legislature amended PA532 it did not go back and amend PA500, although they were tied together. It all comes down to an argument that the state has a moral obligation to make good on the agreement.
"The odds of the city getting it without strings attached are probably slim," Cockrel says. "We're going to have to give up something in order to get it."
There were a lot of other things discussed at the Council table on Monday: raising revenues through better tax collections, collecting money businesses owe on permits and licenses, competitive bids for health insurance, public lighting and other services, and more.
Another thing that was clear at the meeting is that along with the level of layoffs discussed, there would have to be reorganization of the way many city departments operate, and some departments would have to be shut down.
We face tough, draconian measures in this cash-strapped city. The only way for city government to sell it to citizens is if City Council and the mayor's office can work together and present a unified vision. It would help if the governor were on board too.
Curiously, there was no mention of how the much-discussed but never quite defined Detroit Works plan fits in with all this. Maybe it's a moot point. At this juncture it seems that Detroit doesn't work.
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