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August 11, 2009
Detroit - Mayor Dave Bing warned Monday the city is bleeding money and heading for receivership if city unions don't agree to a 10 percent wage cut by Aug. 28.
"You are talking about running out of cash in the next 60-70 days," Bing said after an hour-long closed-door meeting in Cobo Center with leaders from roughly 50 unions.
"Time is not our friend, it is not our ally. We have to move fast. If we go to receivership, all bets are off."
Over the past few years, Detroit has accumulated a $350 million deficit. It could grow this year because revenues are down $100 million because of falling taxes and fees. Bing has said the city won't be able to pay its bills by Oct. 1 unless unions agree to wage concessions. He couldn't say how much the cuts would save.
Other options include closing City Hall one day a week. But even if the unions agree to compromise, Bing said a large-scale reduction in the city's 13,000-member work force is inevitable.
"There are going to be layoffs regardless. At a minimum of 1,000 layoffs," he said.
Union leaders, who were heard shouting inside the meeting, remained steadfast in their refusal to alter contracts to lower pay and balked at claims the city is going broke. Some accused Bing of ignoring other cost-saving measures before pushing the pay cuts.
"Clean up your own house and then come talk to us," said Henry Gaffney, president of the Amalgamated Transit Union, which represents roughly 1,000 bus drivers who make about $17 an hour. "Do your due diligence."
Under receivership, a state-appointed official would oversee the city's finances. That would shield Detroit from liquidating assets to pay creditors and could free the city from contracts. But it also would likely be wildly unpopular in a city that is wary of outside intervention.
John Riehl, president of American Federation of State, County and Municipal Employees Local 207, said Bing is "bluffing" about receivership.
"He is just pushing his agenda but it's not having any effect," said Riehl, whose union represents water and sewer workers, and has threatened to strike.
"The city can always borrow money on anticipated revenues and get loans. That's just business as usual."
Ed Cardenas, Bing's press secretary, said Bing has had no discussions with Lansing lawmakers about receivership.
But it is a possibility, Cardenas said.
Bing already has persuaded the City Council to adopt an ordinance to cut pay of non-union workers by 10 percent to save about $11 million a year. Salary reductions for his employees begin Sept. 1, Bing said.
All eight members of the City Council said Monday they will voluntarily cut their pay 10 percent in September. Members make $81,312; the council president makes $85,456.
"It's lead by example," said Council President Pro Tem JoAnn Watson. "The city desperately needs to harness its resources."
The cut would be voluntary because elected officials' salaries are set by the Elected Officials Compensation Commission, which hasn't met in several years. New council members who take office in January wouldn't be obligated to follow suit unless the commission acts.
Al Garrett, president of AFSCME Council 25, which represents 3,500 city employees, said workers want assurances they wouldn't lose their jobs later if they agree to the 10 percent pay cut that would be carried out through 26 unpaid days off per year.
"This is quid pro quo," Garrett said.
The layoffs Bing promised Monday, which would come on the heels of another 318 since he took office in May, will result in some loss of services.
Last week, a top aide to Bing warned residents to anticipate decreased bus service and less diligence in cleaning up illegal dump sites.
Another scenario on the table involves some employees working four-day weeks that could result in the closure of City Hall once a week.
"It's a part of the negotiations," Cardenas said.
If the city were to go into receivership, the governor would have to intervene and appoint an emergency manager.
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