The city of Detroit is in dire financial straits and Mayor Dave Bing is trying to correct the course before it’s too late.
The state of Michigan is on the verge of appointing an emergency manager for the Motor City due to the size of its deficits.
Mayor Dave Bing presented a plan to Detroit City Council last week to keep the city from being taken over financially by the state. The council, unfortunately, rejected the plan because they felt it was too heavily weighted toward union concessions. The group also didn’t see where it would stop the state from stepping in with an emergency manager.
Bing wants to wring $360 million out of the city’s budget between now and July 2013. His cuts include layoffs, restructuring vendor payments, and reductions in public safety. Even with his reductions, it is estimated that the city could still have a $45 million cash deficit by the end of the fiscal year on June 30.
Lots of opinions have been stirred up in Detroit because of the problems and how to handle them. In short, officials in Detroit want the city to remain independent and work out the deficit issue on its own. But to do that, the leaders must make drastic and immediate cuts to city services, salaries, and union benefits to continue its independent status.
The union benefits are the key puzzle piece to staving off emergency management from the state. But, like scenarios that played out in Wisconsin and Ohio in 2011, benefit cuts are the last thing that any union leaders want to see. Michigan, with its heavily unionized workforce, has the same line of thought when faced with cuts at the municipal level.
Unfortunately, in this situation the city has long seen financial woes and does not have many options to come out of this predicament. Detroit has not had a balanced budget since Bing took office in 2009.
No matter what plans Bing has presented, it is still ultimately up to Gov. Rick Snyder and State Treasurer Andy Dillon as to whether they think Bing’s plan will be enough to save Detroit’s finances. In an interview with the Detroit Free Press, Treasurer Snyder said that he felt the state had a responsibility to make sure cities were financially sound and adequately providing for its residents.
“The state has an obligation, and when we see a city like Detroit, where we estimate they will run out of cash in April, you have to make sure that public health, safety and welfare are satisfied. I don’t want a federal judge to get involved and solve that problem for folks. That’s our job,” said Dillon.
Dillon mentioned the fact that residents are ultimately the ones losing in these battles. They are being forced to wait ridiculously long for city buses, are unable to connect to government offices, and are sometimes being ignored when they call for police help.
If Michigan has to appoint an emergency manager for Detroit, things will change quickly in the city government. The board responsible for oversight could immediately move to make cuts, including the full salaries of the mayor and the board, and do away with union contracts.
Observers expect a decision from the state this week about how they plan to move forward. No matter the outcome, people should expect major financial changes and disruptions coming to Detroit city government.