Detroit: Bing seeks $200M savings in new city budget

By Corey Williams

Associated Press

DETROIT (AP) -- Detroit faces a possible state takeover if the city can't find $200 million in savings and show signs of improving financially during the upcoming fiscal year, Mayor Dave Bing warned the City Council during his annual budget presentation on Tuesday.

Bing said Detroit's current $155 million budget deficit could swell to $1.2 billion by fiscal year 2015 if the city fails to reduce its payments to two city pensions, rein in health care expenses for employees and retirees, in addition to other cost savings.

Angst between the city and council is typical during the annual budget process, but this year the stakes are higher because of last month's passage of a law giving state-appointed financial managers more power when fixing the finances of Michigan municipalities and school districts. That oversight also includes taking power from local elected leaders and tossing out union contracts.

"The state has made it clear that any city that fails to address its financial issues on its own will have an emergency financial manager appointed," Bing told the council.

Bing's budget is $3.1 billion. He also gave the City Council his five-year deficit elimination plan which accounts for declining revenues from state and federal sources.

The council will hold budget hearings and make recommendations or changes to Bing's proposal. The new fiscal year begins July 1.

"We are in a terrible situation. We will not be able to eliminate our structural deficit in one year," Bing later told reporters. "If the governor wanted to send in an emergency financial manager, he could do it now."

It was clear that his message Tuesday also was aimed at city bargaining units. Bing had struggled with getting some city unions to agree to wage concession, including a 10-percent pay cut, since winning a special election in May 2009. In his 2011-12 budget plans, Bing would go back to unions for more concessions, including a 20-percent reduction in the city's contribution to medical plans.

That would save Detroit $75 million by 2015, Bing said.

He also plans to ask Detroit's two pension systems to allow the city to suspend -- for one year -- its annual payment that compensates the retiree systems for losses in assets. That payment is $65 million this fiscal year.

"This council, our unions and our pension boards must step up and work with us by adopting this budget, opening contracts and negotiating the savings we need," Bing said.

"We will lose control of our destiny to an emergency financial manager" if the unions and pension boards refuse to accept substantial concessions, he added.

Getting union support may not be easy.

A two-page flyer printed by AFSCME Local 207 and passed out prior to the council meeting bears the headline: "The Battle for Detroit -- No More Concessions!"

The local has scheduled a picket outside City Hall Tuesday afternoon.

"We knew it was going to be a cutback budget," said John Riehl, Local 207 president and member of the city's General Retirement pension board. "We don't believe he wants to be a fair negotiator. The way he's been acting, we might as well have an emergency financial manager."

And talk of a state takeover is being used like a threat, Riehl added.

"I don't believe the governor has the nerve to try to take over our city," he said.

Council President Pro Tem Gary Brown suggested deeper cuts into the ranks of city workers to help reduce costs.

"I don't think we can get through this crisis without cutting heavily into our employment ranks," Brown said during the presentation. "I don't think that 1,000 city employees being laid off or permanently let go is an unreasonable number."

Bing has been hesitant to lay off workers during his time as mayor. He has reduced the city's work force by 1,800 in less than two years, but much of that has been to retirement and attrition.

Published: Thu, Apr 14, 2011


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