Public transportation: Detroit spends $40 million more than average among its peer cities on public transportation. Because the state pays half that cost, the city would save $20 million through such measures as changing the purchasing system and providing training in management and technology.
Tax collection: Detroit fails to collect 10 percent of property taxes owed the city, compared with a national average of 2 percent. Harris suggests using management practices employed in other cities to bring Detroit’s collections in line. The result would be a revenue increase of $16 million.
Maintenance contracts: Detroit spends about $10 million a year in maintenance contracts with companies such as IBM and Xerox to ensure machines get fixed when they break down. But the city has thousands of separate contracts. Harris suggests the city hire an insurance company to assess the city’s contracts, a service offered at no cost. The company would then offer a single policy that would replace all the independent maintenance contracts for one lump sum. Possibly the most attractive feature of the proposal, says Harris, is that the company will provide Detroit a complete physical inventory of equipment at no cost to the city. Based on savings of other cities and large companies, the lump contract would save the city from 20 percent to 50 percent, Harris said. Savings: up to $5 million.
Workers’ compensation: The city spends $18 million a year on workers’ compensation. An audit suggests the city law department employ better management practices to reduce claims. Improvements include routinely monitoring files to eliminate overpayments, creating a risk-management department, evaluating attorneys based on performance and developing and implementing a formal return-to-work program. Savings: $5 million.
Trash collection: The city spends eight times the national average to collect and dispose of garbage collected from businesses. If the city increased rates to cover costs, the Department of Public Works would increase revenue by about $6 million.
Emergency medical services: Detroit collects 27 percent on its EMS bills. Audits show employing better management practices would increase collection to the national average of 45 percent collected. Revenue increase: $4 million.
Fiber optics: If Detroit spends $16.8 million to lay fiber-optic cable through the public-lighting system, Detroit would save $3 million a year it pays to Ameritech for leased lines used for Internet and other uses. Hundreds of currently leased lines are underutilized, the audit stated. After six years, the lines would pay for themselves and provide high-speed Internet service to Detroit municipal buildings, including the libraries. In addition to the savings, Detroit could use the lines to sell Internet service to private companies downtown for a profit, and use the cable as the backbone for a municipal cable service. Savings: $3 million.
Collections: Detroit spends $1 billion a year on bills for goods and services. Harris suggests the city hire an accounts-payable auditing firm that would identify overpayments and send notices for collection. Such firms normally take 23 percent of what is collected and give the city a report indicating where problems lie. A collections agency could then be hired for companies and individuals who do not pay. Harris says normally one-tenth of 1 percent of a city’s invoices are overpayments, but it is estimated that Detroit has double or triple that rate. Savings: $2 million-$4 million.
Parking: Detroit could increase parking revenue by increasing fine rates, increasing collection on tickets and decreasing ticket process costs, and following practices employed in other cities. Revenue increase: $3 million.
Read this week's related story, "Cost conscience," to learn more about Joe Harris and the frustration he's encountered as Detroit's Auditor General.
Lisa M. Collins is a Metro Times staff writer. Send comments to [email protected]
