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Detroit Will Continue Reforms Suggested Under PA4 Featured

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Proposal 1 may have been smashed but in Detroit, financial reforms sparked by the emergency manager legislation will be carried out as planned.

Just because voters struck down Proposal 1 doesn’t mean Detroit’s financial crisis was wiped out along with it. In fact, some argue that it’s quite the opposite; that without the State’s legislation to mandate emergency managers in cash-poor cities, these cities have no choice but to apply for bankruptcy, thus obliterating bond ratings and shaking the statewide economy.

With the defeat of Proposal 1 comes a new shower of questions.

Will state legislature draft up a new, similar, emergency manager law? Will any cities that already have emergency managers or advisory boards fight to keep them in place? Will elected officials, in order to avoid further financial chaos, carry on the work and advice that these state-appointed officials have given so far?

In Detroit, Mayor Dave Bing said he plans to carry out the suggested reforms that State and city appointed financial advisors laid out during the brief tenure of PA4. Bing wrote in a statement on Wednesday that the City's Consent Agreement with the State is still in place.

Bing wrote:

“I am determined to continue with vital reforms now underway in the City of Detroit, despite the defeat of Proposal 1 by Michigan voters in Tuesday’s election ... In the face of the City’s enormous fiscal deficit, I chose to negotiate a Financial Stability Agreement with the State of Michigan, rather than entertain the appointment of an Emergency Manager.  The Financial Stability Agreement, approved by Detroit City Council last April, is still in place.”

That answers a couple of the immediate questions. Detroit is one of the municipalities whose leaders are electing to keep the financial advisors appointed through Public Act 4 and the reforms they have suggested.  

There are 25 major reforms on the table as part of the consent agreement that Bing met with City Council to discuss last month. At the meeting, Bing got a positive response from the council.

“We are willing participants in the reforms," City Council President Charles Pugh said at the Oct. 22 meeting.

"You have our support," Councilman Andre Spivey told Bing regarding the reforms. "I don't see the Council being an impediment."

At the time, Councilwoman Saunteel Jenkins wanted to know if these reforms could be made Prop. 1 fell through on Nov. 6.

Bing said it didn't.

The Mayor has said that the reforms in question, which involve some compensation shifts for city employees, some reshaping of city departments and the creation of a lighting authority, are necessary for the City to be eligible for up to $80 million in bond sales from the State. Bing said Detroit could receive $10 million by Nov. 15, and another $20 million by Dec. 14 with more installments made as the City meets the reform requirements to boost bond ratings and sales.

Money is the motive for these 25 suggested reforms. Without strengthening bonding capacity Bing has warned over and over that the city will not be able to pay its employees at all, a much more grim outlook than pay cuts or a switch from salary to contract work.

Even opponents of the emergency manager law have to concede: Detroit is in dire financial straights. Just because the State can’t mandate new financial leadership is no excuse for elected officials to sit in denial while the city spins further into financial insolvency. Let’s hope our city leaders do the right thing and make the tough decisions needed.

Is it safe to assume that if we have the right leadership, we won't need Emergency Manager legislation like Public Act 4?

 

Last modified on Thursday, 08 November 2012 11:58
Minehaha Forman

Minehaha Forman is a freelance writer living in Detroit. Born on a farm in Belize, Central America, she moved to the U.S. to pursue higher education and a career in writing. Forman’s work has been featured in many metro Detroit publications including Dbusiness magazine, Hour magazine and Corp! magazine. She has provided event coverage for Real Times Media and The Michigan Chronicle for three years, covering the popular Pancakes and Politics speaker series and other events. Prior to working with the Chronicle, Forman was a blogger with The American Independent News Network where she covered Metro Detroit politics and the 2008 presidential election. She will continue to provide commentary and coverage of Detroit politics as a blogger and feature writer for The Michigan Chronicle’s website.

Website: truthordarestories.blogspot.com/

2 comments

  • Dorian S. Wilson

    I agree with much of what Valarie Johnson writes; EMA is, indeed, going to be paid a great sum of money to tell us something that we could've figured out on our own, with our own people: That the department is inefficient, mismanaged at the operations level and above, fraught with employee apathy, overstaffed with layers of management and supervision, plagued with poor manpower and equipment utilization, and steeped in consultant/contractor graft and overcompensation. And I could've told them that for a fraction of the cost. Of course, EMA is also being paid to implement the suggested changes, provide monitoring and benchmarking, and report progress (or lack thereof). Still...$48 million is a whole lot of money.

    We part company, though, on the opinion that the EM law was designed to usurp union rights and take over Detroit's assets. In this game of "Emergency Manager Musical Chairs", this current administration and council happened to get caught standing, without chairs, and should have been divested of their ability to do any more fiscal harm. Instead, Gov. Snyder allowed them to wheedle their way back into some form of governance. Remember, Valarie...they are the ones who brought the city to fiscal ruin by spending more than the revenue coming in; approving unsustainable budgets; continuing to draw their exorbitant salaries and perks; and failing to stop the hemorrhage of taxpayers, assets, and finances. I hold them culpable, and THAT'S what the EM law was supposed to remedy: When your elected officials perform in such an egregiously inept manner, they should be replaced on the spot--not next election cycle--and the state should take over until such time that fiscal stability returns. Of course, we had a bad experience with DPS being taken over by the state, and ruined even more. So it's understandable, the reluctance of people to give up control to the state.

    Dorian S. Wilson Thursday, 15 November 2012 16:55 Comment Link
  • valarie johnson

    It is not right that the state would hold the escrow money from the city, just to get rid of labor unions and workers. I do not quite understand most of the workers live here in the city and if you lay them off, what revenue will they be getting/? Families will lose their homes even more. The water Department want to pay a consultant firm EMA millions in dollars to tell them how to rid the unions and cut the work force to 32 workers which would not include Sue McCormick and her staff. The water department will be outsourced out to kelly services or other contracting services, this would allow workers to come and go. If you think the Department is a mess see what happens if they are allowed to implement this program with a contractor that has not even deal with a Department as large as the Detroit Water Department maybe they have dealt with one about the size of Warren Michigan. This is another Victor Mercardo move. It's sad that the elected officials have stolen the money and want to rid the workers of everything they have worked for. I do not see Bing letting go of any of his staff, that serves no purpose. the EM that they are paying over 200,000 dollars a year for what to tell the public the city is broke,if the City of Detroit is that broke I do not feel they can justify paying someone this type of money to tell them this. I do not see them cutting back in their Managerial Departments. This is a tactic to rid the city of unions, organized labor, quite frankly rid the city of black families. The city need to handle this without the governor and if they cannot rid the council and mayor of their seats.

    valarie johnson Wednesday, 14 November 2012 10:03 Comment Link

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