  Livernoisyard Member Username: Livernoisyard Post Number: 334 Registered: 10-2004 Posted From: 69.242.223.42 |
Detroit still borrowing itself out of debt! Ailing city running out of cash fast Mayor Kilpatrick says Detroit needs to borrow $130M to pay bills or it will be broke by June. Lisa M. Collins / The Detroit News Council resumes work on budget Red tape, taxes stifle revival for businesses Neighborhood rebirth stalls Mayor stalls cuts as city bleeds cash Cuts mean fewer Detroit street cops Mayor: Fix Detroit or risk takeover Amid growing concern about Detroit's financial status, Mayor Kwame Kilpatrick is asking the City Council for authority to borrow $130 million to cover immediate and overdue bills. Without the loan, Detroit will run out of cash by June, according to a city finance department report. "Without the bonds, it would make our cash situation very difficult," said Detroit Interim Finance Director Roger Short. The money will be used to pay off $74 million owed to the city's pension fund for last year and other bills. But other troubling financial issues are arising as Kilpatrick prepares to announce a restructuring of city government April 12 -- another in a series of attempts by the administration to match steadily increasing costs with steadily declining revenue and get rid of a $300-million deficit: # The city's unions, despite more than a year of negotiations, have not agreed to concessions. With city union benefit packages reaching 90 percent of basic salaries for many workers, compared to an average of 30 percent in the private sector, some in the Kilpatrick administration have suggested cutting whole departments, such as recreation and health. # Detroit's audited financial report for the budget year ended June 30, 2005, is still not completed despite a state requirement for it to be done by Dec. 31. All city loans must now be approved by the state because the city missed the deadline. "Wall Street doesn't like it, the state of Michigan doesn't like it, but people just go along with it," said Joe Harris, the city's former auditor general, about the late financial report. The state Treasury Department is confident the mayor can handle the storm and solve the city's budget woes "working together" with the City Council, said Treasury spokesman Terry Stanton. Loans to cover current bills are not uncommon among government units at all levels in Michigan. Credit rating agencies on Wall Street, however, have cut the city's bond ratings because it has continually piled up debt to cover current bills. "We believe the city has the ability to handle its financial problems and we expect that it will do so," Stanton said. Still, "we need to see the audit report to see where things stand," he said. Whether Kilpatrick can cut deals with the unions is key in fixing the city's finance woes, said Harris and others. "You cannot balance the budget without union concessions," Harris said. "You cannot make enough layoffs to balance a $300 million deficit and still provide services and public safety. We looked at that budget inside out. We couldn't find a way to provide city services at the current rate of compensation and benefits for city employees." Harris says the average city worker makes $40,000, and with benefits, costs the city on average $75,000 a year. In order to save $50 million, the city would have to lay off 600 people, and the savings would not come immediately. Harris retired in November after 10 years as the city's financial watchdog and official auditor. City Councilwoman Sheila Cockrel said she, too, is worried about the state of the budget. "I'm concerned we're running out of cash," Cockrel said. "You have no idea how many outstanding questions I have on this financial thing that have not been answered. There's a huge problem there." The city's audited financial report will officially determine the level of its deficit left over from the last fiscal year. Kilpatrick's current budget forecasts a $100 million deficit for that year, but City Council fiscal analysts say the figure is closer to $162 million. Once the city's audited financial report states last year's deficit, the city will be required by state law to get rid of it. Harris says "poor accounting practices" and staffing issues are to blame for the late report. But interim Finance Director Short refutes that claim. He says complex financial transactions last year are holding up the report, including the city's borrowing of $1.4 billion to fund its pension accounts. Short said the report will be done "hopefully sometime in mid April." Harris says the city's financial situation hasn't changed since he left office. He criticized Kilpatrick's initiatives as not taking enough action. Last year, Kilpatrick proposed in his budget a fast-food tax, union concessions and a 10 percent cut for all city employees, as well as savings from a transfer of Cobo Center and the Detroit Department of Transportation to regional authorities. "None of the major recommendations were accepted or enacted," Harris said. "We will have another deficit for next year unless he takes drastic action," Harris said. "Kilpatrick has found creative ways to keep the city afloat. But you can only do that for so long." | ||
Hamtramck_steve Member Username: Hamtramck_steve Post Number: 2819 Registered: 10-2003 Posted From: 69.209.177.70 |
I don't have time to read through the PA 72 of 1990 right now (the one that sets up the procedure to install an Emergency Financial Manager), but I think the city very quietly triggered step one in the process. "# Detroit's audited financial report for the budget year ended June 30, 2005, is still not completed despite a state requirement for it to be done by Dec. 31. All city loans must now be approved by the state because the city missed the deadline." | ||
Nellonfury Member Username: Nellonfury Post Number: 119 Registered: 03-2005 Posted From: 68.43.156.135 |
Someone NEEDS to help this city to get back on track....big time!!! | ||
Mcp001 Member Username: Mcp001 Post Number: 2069 Registered: 11-2003 Posted From: 69.14.135.95 |
With a cavalier attitude like that, I'm happily counting down the time until everything implodes and Lansing has no choice but to step in. Then things will really begin to get interesting...especially with the elections right around the corner. | ||
E_hemingway Member Username: E_hemingway Post Number: 528 Registered: 11-2004 Posted From: 68.42.176.123 |
It won't happen before the elections. Earliest date for receivership will probably be early 07. | ||
Miss_cleo Member Username: Miss_cleo Post Number: 126 Registered: 05-2005 Posted From: 69.47.85.139 |
Can you say recievership? I knew ya could! | ||
Spidergirl Member Username: Spidergirl Post Number: 170 Registered: 12-2004 Posted From: 63.77.247.130 |
How am I not surprised by this? | ||
Mrjoshua Member Username: Mrjoshua Post Number: 755 Registered: 03-2005 Posted From: 69.209.160.53 |
Joe Harris will be missed. | ||
Mcp001 Member Username: Mcp001 Post Number: 2071 Registered: 11-2003 Posted From: 69.14.135.95 |
What makes you think that the state won't step in until '07? It is looking like all the stops are being pulled out to get people out to the polls this year (i.e. minimum wage hike, SBT elimination) directing people's attention from the fact that Lansing is no longer making any of the hard decisions anymore. I don't see why this should be any different? | ||
Danny Member Username: Danny Post Number: 3829 Registered: 02-2004 Posted From: 141.217.174.229 |
Recievership and suburban control here we come. This is truly the end of Black Detroit. | ||
Quickdrawmcgraw Member Username: Quickdrawmcgraw Post Number: 52 Registered: 10-2005 Posted From: 63.77.247.130 |
This is where the rubber meets the road. No one is not thinking about the major implications if and when Detroit runs out of money. We will be in the spotlight as "the city that host Superbowl XL is broke! They know how to party but they can't pay the bills." | ||
Bvos Member Username: Bvos Post Number: 1299 Registered: 10-2003 Posted From: 66.238.170.33 |
Danny, it's just the end of Detroit. White folks, Hispanic folks, Black folks, etc. all call it home. | ||
Danny Member Username: Danny Post Number: 3830 Registered: 02-2004 Posted From: 141.217.174.229 |
Detroit under recivership 2007: 1. An emergency financial manager will oversee all city and public services. The E.F.M. will withold all city payroll transactions. All city employees will SUFFER under the E.F.M. judgement. 1 To further save city money, the E.F.M. will cut more D-DOT bus services in some main roads for 30 to 15 mins a day to 1 hour. 2 City council public meetings will be reduced for the city council will NOT have a say for all city and public services, nor the mayor. 3. The E.F.M. will resume futher possible criminal investigations on the mayor, city council and their accomplices for possible emblezzlements for city tax monies. 4. The E.F.M. may come up with a proposal to subsidize and privatize all city and public sevices. Corporate companies will become the assistants to the city council, a "Pharisee" like board. 5. The next Detroit election may NOT happen due to money issues, the mayor and city council will dispurse and the E.F.M. and corporate board will the next city council. | ||
Matt Member Username: Matt Post Number: 1015 Registered: 10-2003 Posted From: 24.221.73.42 |
5. The next Detroit election may NOT happen due to money issues, the mayor and city council will dispurse and the E.F.M. and corporate board will the next city council. Thank God! | ||
Danny Member Username: Danny Post Number: 3831 Registered: 02-2004 Posted From: 141.217.174.229 |
6.The E.F.M. and the corporate control city council will further regionalized most city services and tighten the money revenues in its budget. The corporate controled city council oversee all Detroit ghettohoods, what houses are to be demolished, what houses are to be saved, and a major CRACKDOWN of all slumlords who violates city codes. The E.F.M. and the corp. council will asked the regionalized Detroit Police Depts. to increase patrol in some crime laden Detroit Ghettohoods. Who knows the regionalized DPD may start a " SECRET POLICE FORCE" similar to STRESS. | ||
Zulu_warrior Member Username: Zulu_warrior Post Number: 2654 Registered: 10-2003 Posted From: 68.251.27.41 |
Ham Steve....on the money. | ||
Detrola Member Username: Detrola Post Number: 8 Registered: 02-2006 Posted From: 69.14.28.209 |
Receivership of detroit, not on Granholm's watch. Or not quite on her watch. With the election so near, Granholm will do everyhing she can to avoid a state takeover of detroit. To not do so would be tantamount to Blanchard's ill fated snub of CAY and detroit prior to his re-election bid. She has not forgot that it was detroit that elected Engler by shunning the polls to punish Blanchard. Sometime soon a lawmaker in lansing will propose giving detroit some time to get it's financial house in order, without threat of receivership. A democratic gambit. Granholm will express tepid support for such a plan. This should be enough for her to avoid Blanchard's fate. The republicans will oppose this measure citing the state constitution etc. With Granholm safe from the wrath of detroit voters, the onus of a state takeover of detroit will fall on state republicans and more importantly, their candidate, DeVos. What happens to detroit will be inconsequential at that point, except of course, to detroiters. | ||
1honey Member Username: 1honey Post Number: 107 Registered: 02-2005 Posted From: 208.39.170.90 |
Yes he did. Anyone surprised about this story. Joe Harris has been singing this tune for the longest. No one wanted to believe him. CITY IS BROKE, Right here, right now!!! | ||
Gildas Member Username: Gildas Post Number: 478 Registered: 12-2004 Posted From: 147.240.236.9 |
It's not the end of Detroit, recievership is needed to bring about the new Detroit. Get rid of all the ineffectual idiots that have run the city into the ground, privatize all non-essential services, i.e trash, lights, water, etc and get rid of about 5,000 more employees. Other cities our size do well with far fewer employees, put that extra money into police, fire, ems, education, etc. Hoping for recievership ASAP. | ||
Jt1 Member Username: Jt1 Post Number: 7036 Registered: 10-2003 Posted From: 198.208.251.24 |
I agree with Gildas. If the city goes into receivership all of the current union contracts are terminated, correct? This gives the city the leverage they need to privatize, renogiate terms of current necessary unions and change the current pension plans. While the city wastes tooooo much money the fixed costs due to labor, pensions, health care are killing them and nobody is willing to make any concessions. This will speed up the process and help bring in the ability to privatize. I wonder if KK will support this if need be. It seems to give him the ability to implement a good deal of what he spoke about at his latest State of the City speech. | ||
Spitty Member Username: Spitty Post Number: 441 Registered: 07-2004 Posted From: 136.1.1.154 |
Maybe this time next year he'll be giving a City of the State speech. | ||
Danny Member Username: Danny Post Number: 3834 Registered: 02-2004 Posted From: 141.217.174.229 |
Gildas, That was a good ideal when you read my posts. Recievership, privatization and regionalization of all city services could be a miracle and our last hope for Detroit, but a could be a common nightmare for other Detroiters who stood by for the mayor and city " CLOWNSIL". | ||
Danny Member Username: Danny Post Number: 3835 Registered: 02-2004 Posted From: 141.217.174.229 |
By the way the Ghettoman and Street Prophets are totally against it for recivership is another way to bring the powers that be into to city services and "THEY" can do whatever "IT" wants for their pleasure and NOT for the public good. | ||
Gildas Member Username: Gildas Post Number: 479 Registered: 12-2004 Posted From: 147.240.236.9 |
Danny, It does not matter if people stood by the council and the mayor. If you choose to stand by people who cannot manage the city, then you should be prepared for disappointment. Also, I am for recievership for exactly the same reasons that your Ghettoman and others are against it. I want "They" i.e. THEM to do what they want to turn the city around. The city cannot do whats right for the "public good" as it is, otherwise we would not be having a vanishing population and tax base. Bring in everyone from the outside, we are proving everyday that we can't run our city. | ||
Hamtramck_steve Member Username: Hamtramck_steve Post Number: 2821 Registered: 10-2003 Posted From: 136.181.195.65 |
jti asked: "If the city goes into receivership all of the current union contracts are terminated, correct?" If the state appoints an Emergency Financial Manager for Detroit, like they did for Flint, Hamtramck and Highland Park, the contracts are not terminated. Only a bankruptcy court could void the contracts. | ||
Jt1 Member Username: Jt1 Post Number: 7037 Registered: 10-2003 Posted From: 198.208.251.24 |
Thanks. | ||
Supersport Member Username: Supersport Post Number: 9952 Registered: 10-2003 Posted From: 64.118.137.226 |
In all honesty, if Devos ran on the promise that a state take over of Detroit would happen, the lost votes in Detroit wouldn't make a difference. People outside of Detroit would likley support such a move in an attempt to get Detroit back on track. Who knows, it may not be a bad thing. These lucrative "I know somebody" contracts, no bid contracts, workers not showing up yet still getting paid, and all the other bs would be a thing of the past. Every time budget time comes around we seem to be a few steps closer to a state take over. | ||
Swingline Member Username: Swingline Post Number: 420 Registered: 11-2003 Posted From: 172.137.186.71 |
Detrola points out the very real issue of the politics of an EFM appointment. It is just a simple fact that in today's Michigan, no Democrat can get elected statewide without the 350K plus/minus votes provided by the city of Detroit. But the reality is that many of these Detroit voters would view an EFM appointment, even if required under the state law, as a white takeover from Lansing and it would definitely "suppress" the Detroit vote for Granholm. Given this reality, there is no chance that an EFM would get appointed prior to the election. If the city starts defaulting on payments prior to November, Gov. Granholm will have some very difficult decisions to make. | ||
Hamtramck_steve Member Username: Hamtramck_steve Post Number: 2822 Registered: 10-2003 Posted From: 136.181.195.65 |
Supersport said: "These lucrative "I know somebody" contracts, no bid contracts, workers not showing up yet still getting paid, and all the other bs would be a thing of the past." Puh-leeze. Do you know how many no-bid, contracts to supporters and friends Engler pushed through? DeVos wouldn't be any different. | ||
Llyn Member Username: Llyn Post Number: 1474 Registered: 06-2004 Posted From: 68.61.197.206 |
Gildas wrote - "Other cities our size do well with far fewer employees, put that extra money into police, fire, ems, education, etc." A sincere question - not a challenge... can you cite an example or two? | ||
Gildas Member Username: Gildas Post Number: 480 Registered: 12-2004 Posted From: 147.240.236.9 |
Llyn, Off the top of my head, I think that Seattle and Indianapolis are two that fall into range on population and both have under 10,000 employees, with Indianapolis well under that. I will look to see what I can post regarding links and stats and get back to you. Or, if you find the data, please post it. Those two come to mind from past readings. | ||
Danny Member Username: Danny Post Number: 3839 Registered: 02-2004 Posted From: 141.217.174.205 |
RECIEVERSHIP IN DETROIT IS EVIL!!! | ||
Darwinism Member Username: Darwinism Post Number: 439 Registered: 06-2005 Posted From: 69.215.30.34 |
Detroit going broke. Is that still a surprise? For goodness sake, borrowing millions to keep things going isn't going to stop the bleeding. I agree with Supersport that receivership may not be a bad thing because at the very least - the wound can heal. | ||
Keystone Member Username: Keystone Post Number: 212 Registered: 10-2003 Posted From: 63.241.158.33 |
Granholm is in a serious bind. For her to get the Detroit vote she either: - Does nothing, which lets the City spin further out of control and makes the ultimate clean up worse for her successor. - Pumps financial commitments to shore up the city, which alienates the rest of the state and tosses her political opponents a major bone. - Places Detroit into receivership, which would end support from her political base of Detroiters. Which would you choose if you were her? | ||
Gambling_man Member Username: Gambling_man Post Number: 678 Registered: 11-2003 Posted From: 199.178.193.5 |
If I were Granholm, I would try to bait DeVos into even mentioning receivership, then rally the troops behind me..........It would make for an incredible turnout at the polls. | ||
Gildas Member Username: Gildas Post Number: 482 Registered: 12-2004 Posted From: 147.240.236.9 |
And that would help prevent actual recievership how? | ||
Mjb3 Member Username: Mjb3 Post Number: 94 Registered: 11-2004 Posted From: 24.145.222.252 |
Granholm is better positioned politically than Blanchard. Remember she carried west michigan by 5-10 % points against Postumous. Granted, he was a stiff, but Devos doesn't look much better. Gov. Jenny could be bold and say she doesn't want to but must fix the "Detroit" problem. She would still carry the OC(Gore and Kerry both did) and western wayne. Blanchard also fell asleep at wheel. He got rid of all his fundraisers and election people after landslide of 86. Jenny not that stupid. | ||
Lowell Board Administrator Username: Lowell Post Number: 2394 Registered: 10-2003 Posted From: 66.167.58.120 |
How about putting the DWSD on the block? It must be worth billions with its locked in customer monopoly base of 4 million plus. Detroit could dump an entire department and bureaucracy, the 'burbs could learn the true value of water and sewage disposal and stop bitching about Detroit's management. Hey maybe they could put together a package to outbid the private interests who would love to snap it up. | ||
Paulmcall Member Username: Paulmcall Post Number: 603 Registered: 05-2004 Posted From: 68.40.119.216 |
Either way, a hard rain is gonna fall and a lot of city workers are gonna pay. It won't be pretty. | ||
Rberlin Member Username: Rberlin Post Number: 433 Registered: 06-2005 Posted From: 65.43.45.201 |
How can people not want receivership? Seriously, everyone complains about the loss of jobs but then again everybody complains about the service received from said city services. Sure it's going to hurt, badly. But for every day that goes on like this is only making the future bleaker. | ||
Fury13 Member Username: Fury13 Post Number: 996 Registered: 10-2003 Posted From: 69.222.11.226 |
Lowell, could any combination of suburbs/counties even afford to buy DWSD? I don't think that's realistic. | ||
Jsmyers Member Username: Jsmyers Post Number: 1497 Registered: 12-2003 Posted From: 209.131.7.68 |
I think Lowell was implying that a for profit company might be interested. | ||
Fury13 Member Username: Fury13 Post Number: 997 Registered: 10-2003 Posted From: 69.222.11.226 |
Hmmm, well, the legislature might have to change Michigan state law if that was to happen. As it stands now, DWSD is forbidden by law to make a profit on the water and wastewater services it provides. It is allowed only to recover the cost of providing services, and no more. | ||
Perfectgentleman Member Username: Perfectgentleman Post Number: 4 Registered: 03-2006 Posted From: 71.227.26.9 |
Selling off the DWSD is something that should be looked into, and it may not necessarily lead to higher water rates. I think a private firm would run it more efficiently than a city government bureaucracy and be able to keep rates stable, at least initially. There has been talk in the suburbs of creating alternative sources for water, so any new owner of the DWSD would have to remain competitive to keep that from happening. One possible side-effect of this is that the folks who cannot afford to pay their bills in the city may not be given as much latitude as they are today to catch up. Some folks in the suburbs would argue that they are in fact subsidizing Detroit residents now as the revenue they contribute helps offset the many who cannot pay in the city. This is not meant to be slight to anyone who is having trouble paying their water bills, we all get behind on our finances at times. The suburbs are “bitching” because they are paying for a service which is managed by a city government they have no representation in. This is bound to create distrust and resentment on the part of suburban folks as the mayor and the CC are not accountable to them, nor should they be. Any plans of compromise to create a regional water board, which would allow for some transparency in the system in regard to costs and rates are shot down by the powers that be in Detroit. The potential downside of all of this of course is that if rate increases were necessary to generate profits, Detroit residents would be hit by that too. | ||
Kilgore_south Member Username: Kilgore_south Post Number: 27 Registered: 05-2005 Posted From: 209.86.75.96 |
The general view from outside Metro D (from what I read and overhear) is that state takeover is inevitable. Some people love the idea, some hate it, but most figure that it's gonna happen regardless. |
