Detroit City Council Meets To Discuss Financial Crisis
The Detroit City Council continued discussions Monday on Mayor Bing's proposals to address the city's financial crisis.
The mayor announced Nov. 16 that the city will run out of cash if drastic measures aren't taken. The city faces a $45 million cash shortfall by the end of its fiscal year in June, and the state could appoint a financial manager to make sweeping changes.
Bing's administration has said Detroit has an accumulated deficit about $150 million in its $3.1 billion annual budget. On Friday, Bing proposed 1,000 initial layoffs with the possibility of more to come.
City Council members have been outspoken about Bing's plan, with several members saying the mayor's proposals do not go far enough to address Detroit's fiscal problems.
Several proposals came to light at Council's meetings last week. Council members discussed ways to raise revenue and suggested raising the Detroit city income tax to 3 percent for residents and 1.5 percent for non-residents.
Also on the chopping block were subsidies to the Detroit Zoo, Detroit Economic Growth Corp., Eastern Market, the Detroit Institute of Arts and the Charles H. Wright Museum of African American History, according to the Free Press, and 2,300 public sector jobs.
From increasing income taxes to laying off more than 500 police officers and firefighters, the Detroit City Council rolled out an ambitious -- and painful -- plan Monday that it hopes will save the city from insolvency and an emergency manager.
Several Council members reiterated Mayor Bing's call for the state of Michigan to pay $220 million owed to the city, and members also proposed collecting the $15 million in unpaid electricity bills owed by Detroit Public Schools. On Monday, DPS Emergency Manager Roy Roberts announced the district has made significant progress in reducing its own $327 million deficit to $89.3 million.
This is a developing story. Check back here for updates.
President Pro Tem Gary Brown:
"If we could implement them all [the suggested measures] today, we'd probably have a billion dollars in suplus.
Now it's this body's responsibility to cerate a plan. There is no will by this body, I believe, to request an emergency manager. The mayor said he's not going to request one."
Member Brenda Jones:
"There are a lot of means that we can save money. There is a lot of money that's out there that this city has not collected.
We can only cut so much. We cannot cut ourselves out of a deficit. We need to find ways that we go out there and collect the money that's out in the city."
Member Andre Spivey:
"If the state wants the city to thrive, then come help us out."
Member Kwame Kenyatta:
"It has to go beyond the conversation. It has to go beyond the suggestions. I had a meeting with the mayor this morning, and I know he's meeting with unions this evening. I as well implored him to listen closely and to look at the bottom line.He indicated that he is not supportive of the 2,300 layoffs [suggested by some Council members]. I'm not supportive of 2,300 layoffs.
A consent agreement is an agreement to allow the emergency manager in the house.
The next 24 hours is crucial. You need to stand at the ready. The next 24 hours will be very crucial for this city to speak, as the honorable Marcus Garvey said, with 'one aim, one purpose, one destiny, one voice.'"
Member JoAnn Watson:
"Some of us saw this coming. We have a lawsuit that's filed on our behalf. We have 28 plaintiffs around the state. Many people have worked to have petitions with thousands of signatures to repeal immediately this Public Act 4.
That's why this timetable has been called for this week by the governor.
The governor wants to take care of Detroit this week because he wants to act in front of signatures getting certified.
I urge the citizens to stand ready to come, assemble, organize."
Council Member Ken Cockrel, Jr.:
"It is not words that get things done, but actions."
Member Saunteel Jenkins did not attend the meeting Thursday, and President Charles Pugh and Member James Tate left early.
Yolanda Langston spoke on the importance of cleaning up blight and holding homeowners accountable. In Detroit's case, many of those homeowners are banks that hold foreclosures.
"Banks should be held responsible for blight" on the foreclosed homes they own, Langston said.
She asked that a city ordinance that levied fines for blight violation "be revisited and increased."
And she asked that property management companies be held accountable.
"We have a billionaire, Matty Moroun, who owns a lot of properties that are blighted," she said. "It's not just about bringing dollars to the table -- we do need the dollars -- but we do need to hold these folks accountable."
A representative of the Senior Accountants, Analysts and Appraisers Association spoke on many measures the city could take to collect further revenue that the city is already owed. She also noted the cuts in staff for tax investigators have left them unable to do the investigating and collecting work necessary to collect revenue.
"I haven't been in the field since 2006," Ms. Westly said.
She mentioned putting pressure on companies to accurately withhold their employees' income taxes. She mentioned that the association knows of dozens of companies that are not paying the proper amount of income tax withholding. She also said the city's sports teams may not be witholding players' income tax accurately.
Council Member James Tate moved for a line item that would get the council and the administration the names of those companies.
"If we were able to do our jobs the correct way, we probably could bring the city out of its deficit. That's how much money is left to be collected," Westly said.
Dempsey Addison, president of the Association of Professional and Technical Employees, spoke on the need to restore and redevelop Detroit's housing stock. She says doing so would lead to revenue and "stimulate growth of small business and increase spending power of consumers."
"Everybody wins. Nobody loses."
Detroit Police Lieutenant and Sergeants Union President Junetta Wynn criticized the Council and administration looking to concessions from the unions rather than fixing city contracts.
"Not one lieutenant, sergeant, investigator or police officer has signed any contract sent out any bids or mismanaged any money," she said.
Member Watson had fiery words agains the consent agreement, which she said includes provisions that state a debt default would trigger an emergency manager anyway.
"You might be at the table for 30 seconds. It's giving away this city. We have no right to give away this city. If folks don't want to operate and run the city, let them leave."
Pro Tem Gary Brown:
"I think that we could argue that if an emergency manager came in how broad those powers would be, but I think there's no argument that if an emergency manager came in, he would probably gut the collective bargaining agreements of all the unions in order to achieve the savings that are arguably needed."
Brown asked the unions where they stand on a consent agreement between the city and the state, which would allow the city administration broader powers without appointing an emergency manager.
Richard Mack says the unions stand against the consent agreement.
"Any effort for Lansing to come into our city, to our elected leaders, and say, 'We have a better way to do it,' is wrongheaded and it's unconstitutional.
"As far as consent agreement in particular: no. The problem with the consent agreement is even though it's not the full way is that there are no due process provisions allowed.
"It's essentially an emergency manager without going through the process of an emergency manager. So it's wrong."
Richard Mack lawyer for Michigan AFSCME Council 25 says the state can help Detroit with revenue.
One method would be to refinance the $30 million annually in debt servicing that the city currently pays.
Another would be for the state to assist in income tax collection by allowing electronic collection.
"It's been written that the unions aren't interested in trying to save. The unions are interested. The unions have, if you look at what just happened, have been taking ocncessions. You talk about shared sacrifice? The only sharing that's been going on has been taking from city workers," Mack said. "It's easy to flip the switch to do the fulough day. It's not as easy to do some of these structural changes that should have been done in past two-and-a-half years Bing has been in office."
Ed McNeil Michigan AFSCME Council 25 spoke on union concessions and other methods for the city to save money and raise revenue.
"This union since 1981 has been trying to help the city in one way or another giving concession," he said.
McNeil criticized the city's contracting methods that he said have drained money, not city employees.
"There could be 15 percent savings if each contractor gives back 15 percent to the city of Detroit."
He also noted that AFSCME Council 25 has put forward savings of $19 million city on prescription drugs for city workers.
"The union has been to the table," he added. "The union has brought ideas of cost savings year after year to this administration. It's time for this council, for this administration and the unions to sit down in one room. ... We can fill the rooms with individuals to make sure that we correct the problems that are happening in the city of Detroit."
Frank Hammer, who represent UAW members and is president of the Green Acres Community Association. He likened Detroit to New Orleans after Hurricane Katrina, and urged Council to look to Washington and President Obama for help.
"It is time for the City Council here in Flint, in Benton Harbor, to amass a gathering to make a claim to say we're here to cash your check, Mr. Obama. You promised you would give us the same part of support that people in New Orleans deserved and never got under President Bush."
"Under the concept of an emergency manager, there is not concept of citizenship. It is a concept of subject and dictator."
"I think any council manager that backed this financial manager needs to be recalled."
Member Watson and several members of the public noted that the emergency manager law has been used to allow the state to take over communities that are largely African American. There are emergency mangers in Benton Harbor, Pontiac and Ecorse.
Evelyn Foreman said she is a plaintiff of the lawsuit against Public Act 4.
"Though they may have begun with black population with regards to cities that have been singled out, but everyone in this state should be concerned that they may be next."
One citizen speaks up during public comment to note that Council passed a resolution earlier this year in favor of repealing the emergency manager law (Public Act 4).
"Tomorrow we need you guys to stand up and say, 'We don't need that here.' The injustice that this law serves to any community must be stopped. What's going on in Detroit is a vast injustice of democracy. This is not about finances. We can definitely close our $45 million gap."
He called for Detroiters to sign a petition that would freeze the emergency manager law pending a referendum in 2012. Organizers of the petition drive are seeking 250,000 signatures.
"250,000 people is a drop in the bucket in the city of Detroit. Help us galvanize the 500,000 some-odd voters we have to wake up and keep their voice."
Council President Charles Pugh laid down the rules for the unions' meeting with City Council Thursday.
Each representative will get 3 minutes.
Member Watson asked that unions that represent more members be allowed more time to speak.
At the open of Council's meeting Thursday, Member JoAnn Watson noted that Dec. 1 is the anniversary of the Montgomery Bus Boycott. She asked her colleagues to remember Rosa Parks's legacy and the history of the Civil Rights movement and labor movement in their discussion with union leaders this morning.
Member Kwame Kenyatta echoed her sentiment:
"We must turn towards each other and stand united as a city. Because as Detroit goes, the rest of us go. We know that has been the case all over this country. It is in this city that many of the movements, including the labor movement, began."
As early as Friday, the city's third-party authority could be the state of Michigan. Whether Detroit leaders want it or not, the governor — who spoke with Bing late Wednesday by phone — is leaning toward ordering a "financial review" of the city that would pressure all sides by beginning a process that could culminate in a either a consent agreement with council and the mayor or a superseding emergency manager.
A committee of the whole meeting will take place this week. President Pugh had originally proposed a meeting next Monday, but others pointed out that Monday is a furlough day, and that time is of the essence.
Council agrees to meet at Thursday at 9 a.m. with the unions.
Member Watson objected to reports that the Council had presented a plan to Mayor Bing.
"I say there's too much talking to the press," she said. "I don't want anybody speaking for me. The Council has not voted on the consent agreement. I don't even want the word to be mentioned."
Member Kenyatta insisted that anything presented to the mayor contain the words "draft" or "proposal."
"It is being promoted as 'This is Council's plan.' Well this is some Council members' plan -- not all. The body has not spoken until it votes. So it is a proposal."
Some Council members objected to a meeting planned Tuesday afternoon with the mayor. The meeting will be behind closed doors and will only include some Council committee members.
"I know you all want to look at things behind closed doors. That's somethign that needs to come to this table in the open, for our members to weigh in on what's going on, as well as the public," Member Jones said.
Pro Tem Brown and Member Watson echoed her concerns, and President Pugh weighed in to say he was willing to hold the meeting with the full Council at the table.
Member James Tate suggested exhausting any and all measures before turning to layoffs of public safety workers.
"The last thing I want to do, I would be willing to support, is the layoff of public safety members of this city," Tate said.
Tate said he had met with city unions and that members are "begging for the opportunity for 20 and out" -- an early retirement incentive. Tate suggested implementing such a measure would allow the city to reduce the number of layoffs Council and the mayor are considering.
WDIV reports: "The Detroit City Council will meet with Detroit Mayor Dave Bing on Tuesday in a closed-door meeting."
Council should present its short-term savings plan to the mayor. That plan includes a 10 percent budget cut for Council offices, increasing People Mover and DDOT fares, and eliminating city-owned cell phones. Council is also calling for 2,3000 layoffs.
WDIV reports the total savings from these measures would be $68 million.
WWJ reports that Council's budget fix is headed to Mayor Bing:
Council President Charles Pugh said Council has prepared both short term and long term recommendations.
“We don’t disagree with what the mayor is suggesting, but we feel like we should go a bit further,” said Pugh. “The mayor is recommending a thousand layoffs … we’re recommending 2,300, only because that is what we can do immediately.”
“So much of the Mayor’s proposal relies on union concessions, and there is a possibility of that. But we don’t want to leave that up to chance,” he said.
In addition to further discussions on how to trim the budget, Council is scheduled to hold a public hearing to discuss changes to the city retiree pension system.
A proposed bill would eliminate the so-called "13th check" that pensioners receive at the end of each year and restructure the retirement investment system.
A proposed ordinance amending the City Code would also redefine and limit excess earnings on Detroit General Retirement System (DGRS) investments, from which the check is provided, among other strictures placed on the powers of DGRS trustees to distribute funds to retirees.
The hearing is scheduled for 9:30 a.m. Tuesday.
The Free Press is reporting that Council is "resigned" to some form of state intervention in Detroit's budget affairs.
Some council members said they prefer what's called a consent agreement, which would heighten the authority of the council and mayor to devise a plan – subject to state approval – to save the city from insolvency.
"A consent agreement gives the city some tools to restructure and keep a democratic structure in place," President Pro Tem Gary Brown said. "We are going to have a consent agreement. The only question is whether we will have a seat at the table to shape the agreement. We need to do whatever possible to make sure we have a representative at the table."
Some council members dismissed a consent agreement as bad policy because it begins the process of an emergency manager, who would have sole authority over the city's budget and assets. If the state dislikes a recovery plan offered by Bing and the council, Snyder's next step would be giving the mayor sole authority over a financial rescue plan or appointing an emergency manager who could eliminate the legislative branch.
Another revenue-raising measure Council discussed: raising the fare of the People Mover to $1. The People Mover fare just went up from 50 cents to 75 cents three weeks ago.
|@ KenCockrelJr2 : As this p.m., Council is now very close to finalizing recommendations for addressing Detroit's financial woes. More details to come.|
Councilwoman Jones asked if there had been any consideration for the effects the new charter will have on the budget.
Irvin Corvey mentioned the new Inspector General's office that the charter stipulates. "I think the citizens would probably understand that we can't create an inspector generals office on January 1."
They will be looking into whether the office needs to be created right away, with findings back by Dec. 7.
"We were cognizant of not using language that would lock the city into creating something in full-scale implementation in only 60 days or one year," Charter Commissioner Ken Coleman told the Free Press.
Fiscal Advisor Irvin Corvey said that the next step is to update this list and submit it to the administration with the hopes that they will agree.
Member Cockrel: "But we also have to prepare ourselves for the scenarion that the mayor is going to reject this."
Cockrel: "I agree with Councilwoman Jenkins. I think we need to get clarity on this issue whether the 1,800 [civilian layoffs of the 2,300 suggested] includes Council."
He reminded that Council has been cutting their budget for two years. "It's not that we haven't done anything, it's that we're asking the rest of the world to catch up with us."
Jenkins agreed. saying that people have told Council to take a pay cut. "We've taken a pay cut. I think maybe we need to make it clear what we've done."
Pugh said that they will continue to cut.
The Council budget is 5.98 million, so a 10 percent cut from the Council offices would be 598,000.
Council President Pro Tem Gary Brown wants to increase the cut to 30 percent, which is contested. Member Spivey disagrees and thinks it should be 10 percent.
Member JoAnne Watson wanted to demand more taxes from the casinos, which are paying less tax than the national average, and less tax than casinos do in Indiana and Ohio.
Member Ken Cockrel reminded the body that the Council should be looking at short term solutions that the city government has the authority to implement. He said taxing the casinos at a higher rate would only be possible "if the state legislature is brought into it, and they're not going to do it... It's dead in the water... you have a republican governor and a republican legislature who are not going to add new taxes."