During the past 36 months in office we've had the tools and capacity to repair our fiscal house and restructure city government but not the political will. Special interests frequently became a roadblock to necessary implementation of fiscal reforms causing our deficit to increase while corrective measures were delayed.
Detroit's elected officials had frequent opportunities to make the bold cuts, including the FY2011 and FY2012 budgets. Due to the lack of political will we failed to make the necessary cuts to the General Fund Budget. During the FY2012 budget process I recommended a $140 million cut that was eventually decreased to a $50 million reduction. Both the legislative body and administration faltered on making the politically tough choices to change the culture of overspending.
Our primary issue today is that we are burning through cash every minute while the reforms are not being implemented. The progress we have made has been slow and extremely frustrating.
There has been incremental progress. We approved a contract to modernize our payroll system that will save several million dollars. We also supported the recent passing of state legislation to create a Public Lighting Authority that will provide the tool and financial mechanism to get the streetlights on in our neighborhoods.
Yet, there is much work to be done! We need to cut the workforce by 2,000 positions as the current operations are unsustainable given our declining revenue. Therefore, I support Mayor Dave Bing in implementing furloughs and layoffs the first of the year.
Since 2009, it has been my point of view that it was important to take action on behalf of the 700,000 Detroiters. Most Detroiters want the budget balanced and quality city services delivered, no matter who is flipping the switch.
My belief is the silent majority of Detroiters want the changes to occur no matter the sacrifice in order for the long-term betterment of a thriving Detroit.
A state-appointed emergency financial manager (EFM) is not my number one choice and I have never supported such an action. I believed the consent agreement would afford us the tool and financial oversight by the state and Financial Advisory Board to make the necessary fiscal reforms; however both the City Council and Bing administration failed to respond with the sense of urgency warranted in this crisis. While an EFM is draconian, it is likely the only option to avoid bankruptcy as the city's expenses continue to outpace revenue and cripple our cash flow.
The City of Detroit has a five-week window before the likely appointment of an EFM. Detroit's elected officials have an opportunity this Tuesday, December 11 to approve nearly a dozen financial reforms for implementation by the Bing administration. Tuesday is critical in moving forward in a democratic fashion. It is crucial that City Council and the mayor make the tough political decisions together if we are to avoid the prospect of an EFM.
In my opinion, bankruptcy is not an option for Detroit as it has widespread impact on public and private institutions in metro Detroit, and would likely increase unemployment.
Many have said why not let the City of Detroit file bankruptcy when GM and Chrysler went through bankruptcy and are now thriving. However, GM and Chrysler had managed corporate bankruptcies with federal dollars tied to specific benchmarks. A municipal bankruptcy for the City of Detroit will be a detrimental route. City contractors and vendors will lose their lines of credit and will likely layoff their employees. Wayne, Oakland and Macomb counties, as well as the State of Michigan, will face bond rating downgrades, which equates to higher operating costs.
As I have shared before, Detroit is not a failing city. It's city government that is broken. The corporate, business and philanthropic communities are making progress with significant investments in Detroit and have not waited for the governance challenges to be fully addressed. An example is the recent announcement that Mike Ilitch, owner of the Detroit Red Wings and Tigers, will create a $650 million sports, entertainment and residential district. Current residences in downtown, in Midtown and in Corktown have a waiting list for occupancy. Dan Gilbert of Quicken Loans has brought 10,000 employees into downtown Detroit and invested in more than a dozen commercial properties. Furthermore, the Detroit Zoo and Detroit Institute of Arts (DIA) are thriving under regional support, as well as the regional authority that is leading the renovations of Cobo Convention Center.
I will not waver in an effort to join with my council colleagues and Mayor Bing to make the necessary bold financial reforms. If we don't move swiftly, the certainty is an emergency financial manager will take even bolder action on behalf of Detroiters.
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