Detroit Mayor Seeks Concessions from Unions; Threatens Receivership

Dave Bing, the mayor of Detroit, knows all about performing under pressure before a crowd. As a Hall of Fame point guard with the Detroit Pistons, he routinely went up against the NBA’s best. But as that debt-ridden city’s mayor for the last two years, he’s become embroiled in a potentially cataclysmic showdown with its four dozen public employee unions. Presenting his proposed 2011-12 budget to the city council before a packed house on April 12, Bing declared that municipal workers must contribute more toward union-negotiated health and pension plans.  Unless they concede, he would invoke a new Michigan law to bring in a receiver to void existing collective bargaining agreements. “If we do nothing, by 2015, fringe benefits are on pace to consume half of our entire general-fund revenue,” Bing said. “That is not sustainable. We can’t afford benefit packages so rich.” He’s hardly the only elected official talking this way.

The most significant domestic policy story thus far this year may be efforts by governors, especially in the Midwest, to limit union-negotiated wages and benefits – and the reaction these efforts provoked. In Indiana, New Jersey, Ohio and Wisconsin, Republican governors Mitch Daniels, Chris Christie, John Kasich and Scott Walker, with varying degrees of success, have tried to persuade their respective legislatures to place curbs on public employee collective bargaining packages. Democratic state senators in Indiana and Wisconsin fled to unknown locations in order to block a quorum. The situation in Wisconsin, as National Legal and Policy Center has noted, erupted into an illegal takeover of the State Capitol Building in Madison and potential riot conditions. But it isn’t just “right-wing Republicans” who recognize the day of reckoning. In California and New York, Democratic Governors Jerry Brown and Andrew Cuomo have demanded major concessions from public employees unions as well.

Michigan, a state with a 10.3 percent unemployment rate this March (down from 13.3 percent twelve months earlier) and a $2 billion budget deficit, has had its own ongoing budget battle. New GOP Governor Rick Snyder coaxed the legislature this February to pass legislation authorizing appointed emergency fiscal managers to void municipal union contracts in distressed cities. Under this law, the state already has taken over Detroit’s public school system. And at the western end of Michigan in Benton Harbor, a state-appointed manager has stripped financial authority from city officials; no agency may make budget decisions without the receiver’s explicit approval. It was almost inevitable that the City of Detroit, whose incidences of violence, arson and welfare dependency far exceeds that of most U.S. cities, now could face the same music.

Dave Bing, now 67, may be the right man at the right hour. A couple years after his 12-season pro basketball career ended in the late Seventies, he started up a business supplying metal stampings for General Motors and other clients. By 1985, he expanded his Detroit-based company to two plants generating combined annual revenues of $40 million. Cut to October 2008: Detroit, wracked by a chronically large black underclass and decline in the domestic automobile industry, couldn’t pay its bills. Its corrupt mayor, Kwame Kilpatrick, had left office the previous month following a plea bargain on a state perjury charge. Bing that month would declare himself a candidate for mayor in a special nonpartisan primary to be held the following February. He finished first out of 15 candidates and then defeated interim Mayor Kenneth Cockrel Jr. in a May runoff. A half-year later in November, he was re-elected to a full term.

Mayor Bing holds one of the toughest jobs in the nation, running a city whose decay now regularly serves as unflattering photo material for magazine feature articles. Detroit’s population, which stood at 1.2 million in 1980, is now down to about 715,000. Closing the budget gap by 2015 is a top priority. The legacy deficit, originally estimated at $85 million, is $155 million. The mayor’s proposed $3.1 billion budget for the forthcoming fiscal year, which starts July 1, would: 1) cut the City’s health plan contribution by 20 percent; 2) skip an annual loss-recovery payment to City pension funds; and 3) eliminate defined-benefit pensions for all new employees. Bing already cut $100 million from the budget a year ago; the council, if anything, wanted to cut more. The mayor explains his austerity plan this way: “The old days, when getting a good city job meant that you put in your 20 years with the expectation that city government could take care of you for the next 40, is no longer a realistic or viable option.”

Local leaders of the American Federation of State, County and Municipal Employees (AFSCME), who accepted an imposed three-year contract in return for no wage or salary cuts, wouldn’t exactly agree with that assessment. “There is an anti-union movement in this country, and Detroit and Mayor Bing are no different,” remarked Catherine Phillips, AFSCME’s lead negotiator with the City. With 1,800 employees either terminated or retired since Bing took office, the municipal work force is now down to around 11,400. And nonessential workers are furloughed one day out of 10.

Detroit already qualifies for receivership under the Michigan emergency financial manager law because of its chronic late payments. But neither Mayor Bing nor Governor Snyder is particularly eager to activate the law if there are other alternatives on the table. Last week, the mayor visited the legislature and the governor in Lansing to request approval of a one-year increase in the City tax on casino revenues that presumably would raise an extra $20 million. He also seeks special legislation to hike Detroit’s income tax from 2.5 percent to 3 percent and continue a tax on utilities, the latter allowed under current law only for cities with a population of at least 750,000. It’s not wise to raise taxes to expand the tax base. But at least Bing knows what other chief executives in government are coming to know: Cutting spending is necessary and involves concessions from the unions.


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