I can understand the frustration of Mayor Bing in Detroit who has fiscal headaches that no major city has ever had before.
A $30 million shortfall will now have to be made up before the end of the year or the city will be forced into bankruptcy. The money, however, is available through the state of Michigan’s sale of bonds on Detroit’s behalf. But to access the cash, the city has had to agree to several conditions, including hiring a law firm named by the state to shepherd Detroit through the complicated fiscal reforms.
But the city council is balking.
On Tuesday, the city council voted 8-1 against hiring Miller Canfield, an international law firm with offices in Detroit, tasked to shepherd the city though a fiscal reform plan established by the Michigan Department of Treasury last week. Failing to hire the firm puts the city out of compliance with the plan, which is designed to provide the city with access to $30 million in bonds held in escrow since March. The bond money was part of $137 million that the state has raised on the city’s behalf through a debt sale.
Had the city agreed to move forward with Miller Canfield, the state would have released $10 million to the city that same day, with an additional $20 million by mid-December. In a state released late Tuesday, Mayor Bing said the vote “is one more example of how city council has stalled our efforts to bring financial stability to the city of Detroit.” He added that the only remaining cash infusion on the city’s horizon was property tax revenue due in January.
City council members rejected the $300,000 contract with Miller Canfield primarily because it presented a conflict of interest, as the firm was hired by the state to write the agreement that the city is now tasked to follow. Some members also criticized Bing for suggesting the city will go bankrupt by the end of the year and said that they deserved more time to seek other bids.
During Tuesday’s meeting, council member Kwame Kenyatta described the contract as “a violation of morals,” according to the Detroit News Wednesday. “I don’t see how any member at this table in good conscience on behalf of the people of the city can vote for this,” Mr. Kenyatta said.
Council President Charles Pugh also blasted the mayor, telling WXYZ-TV, the local ABC television affiliate, that the law firm “was shoved down our throat, and we felt like we were being forced into accepting one particular law firm.”
The council is acting as if they had a choice in the matter. They don’t. If the money is not forthcoming, Mayor Bing will be forced to start furloughing city workers without pay:
In order to make up for a $30 million shortfall expected by year’s end, Detroit Mayor Dave Bing announced on Wednesday that city employees will take unpaid furloughs and that he would implement “other cost-savings actions” starting the first of January.
“We will ensure that revenue-generating departments are not impacted by these cost-cutting measures. Most importantly, I want our citizens to know that public safety will not be jeopardized,” he said in a statement.
The council has knocked down proposal after proposal that would raise cash and reform city departments:
In an epic (and not in the good sense) eight-hour Tuesday meeting, the Detroit City Council shot down one proposal after another: a contract to reform the Detroit Water and Sewerage Department; a contract with law firm Miller Canfield that the state says is necessary for the city to receive a cash infusion; a land sale to financier John Hantz, whose dream in life is apparently to beautify the east side with a tree farm, which would have the nifty side effect of returning derelict parcels to the city’s tax rolls. (The Hantz Farms land sale and the Miller Canfield contract have officially been tabled, not rejected, but let me tell you — if you watched any part of that meeting, all signs are pointing to no.)
Taken individually, there are surely questions to be asked about each of those deals. (With, perhaps, the exception of the Hantz land sale, which has been exhaustively discussed for years. If you’ve got outstanding questions at this point, the Hantz folks really aren’t the ones to blame.)
But in the context of Detroit’s financial situation, denying or pushing back these decisions are all questionable choices.
The consent decree isn’t working because city government — and Mayor Bing is not without blame — refuses to face reality. When your house is on fire, you don’t stand around arguing who should call the fire department.
Time for the mayor and city council to put aside their differences and act in the best interest of Detroit — both short and long term.