Changing Gears

Detroit faces a bleak fiscal future and needs to change. In a hurry.

That’s the message Mayor Dave Bing delivered in a speech about the city’s grave financial condition. Detroit faces a cash-flow shortfall of $45 million as soon as April, at which time it would be insolvent. Without immediate changes, the state of Michigan will likely appoint an emergency manager whose power exceeds the mayor and city council.

Mayor Dave Bing hopes to stave off state intervention in Detroit's fiscal crisis.

In order to stave off a move that would be unprecedented for Michigan’s largest city, Bing has proposed a variety of fixes: an across-the-board 10 percent pay cut for city employees, increasing employees’ share of health-care premiums by 10 percent, a not-quite-1-percent tax increase on city businesses, the privatization of the city’s lighting and transportation departments and retiree pension reforms.

He also requested $220 million from the statehouse, a give-back for cuts in revenue sharing (a request that almost certainly will not be granted).

Is Bing’s overall plan enough to thwart state intervention? Reviews are mixed.

Columnist Stephen Henderson at the Detroit Free Press says longer-term projections show the city needs at least $161 million to stay afloat in the not-too-distant future and that the mayor’s proposal is not far-reaching enough. “Bing still gives the impression of a leader who is looking more readily for short-term relief than long-term solutions,” he writes.

Daniel Howes at the Detroit News sees Bing’s solutions in a more positive light. But ultimately he finds too many parallels with Detroit’s automotive collapse and eventual federal bailout to think that state intervention isn’t an almost-certain outcome.

To recap decades of Detroit’s fall, Howes writes the city’s strategy seemed to be, “Ignore reality, no matter how many times critics and analysts outline it.” And, “Delude constituencies into believing that decades of weak management, poor decisions, ineffective leadership, over-reaching unions and inane political grandstanding can be overcome in months … by the same institutions culpable in the crack-up.”

Bing says he’s trying to avert the appointment of an emergency manager at what is, for all intents and purposes, the eleventh hour. Minutes after his speech concluded, Michigan Gov. Rick Snyder released an ominous statement that made an appointee seem like an inevitability: “Based on the mayor’s remarks tonight and the severity of the situation he described, we anticipate he will be submitting a request for a preliminary financial review in the near future.”

Can financial woes decades in the making be corrected in a matter of months? The clock is ticking.