Looking at the pension deal

[Wesley Mouch]

Because we don't have more money for funding today. The adjustment would come from the pensions going down rather than the funding going up. If you assume 4% you have to cut the pensions a lot more, so it is a relatively unattractive option.

Am I wrong that the whole idea here is to stop doing things for which we don't have the money? Otherwise we are no better than Kwame, rigging the game to our own benefit -- and harming our brethren.

[mwilbert]

Am I wrong that the whole idea here is to stop doing things for which we don't have the money? Otherwise we are no better than Kwame, rigging the game to our own benefit -- and harming our brethren.

Certainly that is not the whole idea--in this case in particular we have to balance fiscal prudence against our pre-existing obligations to pensioners. If we knew that we were underfunding the pensions, I would say we should not do that. But we don't know; the assumptions being made here aren't ridiculous, and there is a reasonable prospect that the funding will be adequate. If the agreement goes through as proposed, a lot of money will have been added to the pension funds, and their obligations will have been reduced substantially, and the return assumptions will have been reduced considerably as well.

Given that the alternative is an immediate, substantial cut to pensioners who are largely not in a position to absorb it, and who will also be absorbing benefit cuts, I'd say it is a reasonable approach.

[erikd]

City has numerous ways; water, taxes, art, parking, tunnel, zoo, airport, tickets, fines, bonds, property, etc.

The city doesn't have any way to meet its underfunded retiree obligations. None of your suggestions will come close to solving the problem.

1. Water- The water department is separate from the general fund and can not be used to shore up general city debts. Even if it were possible to transfer assets or revenues from the water department into retiree benefit funding, it is unlikely that the water department has any assets or funding to spare, given that the water and sewer infrastructure is crumbling and there is no way that the current system can be maintained without large rate increases.

2. Taxes- The city already charges the highest property and income taxes in the state, and provides terrible services in return. Asserting that Detroiters, who already pay the highest tax rates in the state, should be taxed at even higher rates, is insane.

3. Art- The concept of selling off the DIA art collection to pay off debt is such an unrealistic, short-sighted, and unfeasible idea, I could write a book about it. The DIA is funded by a regional arts tax that is not just a bunch of money that the city can simply divert to pay for retiree benefits. The same goes for much of the DIA art collection. These are donated works of art that have restrictions. The DIA art donors gave their property to the museum for the expressed purpose of it being held in trust and accessible to the public. If they wanted their donations to be liquidated and used to fund city debts and general obligations, then they would have just cut a check or gave their art to the city for auction. While the city may technically "own" the DIA, the DIA collection and operations are funded regionally, with conditions that the donations and taxes be used solely for the DIA, and not general city debts and obligations.

4. Parking- The Detroit municipal parking department, which controls our city garages and parking meters, is a money loser. Contrary to popular belief, the function of the municipal parking department is not to make money, but rather to regulate and insure the availability of parking in the high demand areas in the commercial districts of the city. From a purely short-term cash flow perspective, the city would be better off if they ripped out all the parking meters and eliminated the parking department altogether. This would save the city a bunch of money and hassle, but the result would be that the residents and workers in the commercial districts would just keep their cars there all the time, and there would be no street parking for the customers and clients who come into the commercial districts to patronize the businesses.

5. The Tunnel- The tunnel provides a steady revenue stream for the city's general fund. This money is already being used to help fund retiree benefits, pension payments, and city services. Selling off the city's ownership of the tunnel for a one-time debt payment for the pension fund or other creditors would only put a small dent in the city's current debt, but it would also rob the city of a much-needed stable source of annual revenue.

6. The zoo- The zoo is another example of a cultural asset that does not generate revenue. The city of Detroit subsidized the zoo with annual payments until just a few years ago. As it stands now, the city no longer funds the zoo with tax dollars, and the assertion that the city should try to sell off animals or sell of the property to a developer just to [[maybe) make a few million bucks is absurd. The zoo is not a moneymaker, it is not an extremely valuable asset that can be liquidated for any significant amount of money, but its destruction would be a detriment to the city and region.

7. The airport- City airport is a grossly underutilized asset that would benefit the city and region greatly if it was expanded and fully capitalized. I don't see a scenario where the city could just sell off the airport to some private developer and make a bunch of money on the transaction, but there is a big opportunity here to invest in the expansion and upgrade of the airport to facilitate long-term growth and investment. There is no money to be sucked out of the airport to fund debts and retirees at this point, but if the right strategy and investment were to happen, city airport could be a very strong asset to drive future growth and revenues.

8. Tickets and fines- The city issues plenty of tickets and fines right now. I would certainly like to see stronger ticketing and enforcement of blight and properties that don't meet code, but any increase of ticketing that is actually followed up with enforcement is not likely to result in a significantly increased revenue stream for the city, if it were to result in any kind of increase at all. This is another example of a "source of revenue" that costs more money to collect than it actually brings in.

The point of tickets and fines is not to be a revenue generator for the city. The whole point of issuing tickets and fines for code violations and misdemeanors is not because it is a moneymaker for the government, but rather to discourage people from doing negative actions [[or not doing positive actions), that are detrimental to the community. If issuing tickets and fines paved the way to government solvency, Detroit would be rolling in the dough.

The reason why that isn't happing is because it costs more to issue and collect tickets and fines than what is charged. Just think about how much money it costs to issue and prosecute a simple blight or code violation. If somebody doesn't mow their lawn or leaves a broke-down car on their property, there has to be a complaint filed, then a cop or other city employee has to go out and write a ticket. Then there has to be a court hearing, and then the enforcement of the small fine that the judge orders, if the judge finds the defendant guilty at all, which would require a cop or city worker to show up in court to prove.

How much money does it cost the city to ticket and enforce a simple minor blight violation? A few hundred dollars? Maybe a thousand dollars? For a $100 blight ticket? Even if we doubled the cost of tickets and fines, it still wouldn't be profitable for the city.

9. Bonds- This may be the most ignorant and moronic suggestions on the whole list. The city is literally bankrupt and simply doesn't have enough money to pay its debts, and you think that issuing bonds [[borrowing more money) is a solution to the problem? I don't even know how to respond to an idea that is so profoundly stupid.

10. Property- As I stated earlier, Detroit has the highest property taxes in the state, and one of the highest property taxes in the entire country. The USA Today ranked Detroit #9 in their list of cities with the highest tax burdens in America. Do you really think that increasing the outrageous taxes in Detroit is really the answer?

http://www.usatoday.com/story/money/...rates/5513981/

[Hermod]

The city doesn't have any way to meet its underfunded retiree obligations. None of your suggestions will come close to solving the problem.

1. Water- The water department is separate from the general fund and can not be used to shore up general city debts. Even if it were possible to transfer assets or revenues from the water department into retiree benefit funding, it is unlikely that the water department has any assets or funding to spare, given that the water and sewer infrastructure is crumbling and there is no way that the current system can be maintained without large rate increases.

2. Taxes- The city already charges the highest property and income taxes in the state, and provides terrible services in return. Asserting that Detroiters, who already pay the highest tax rates in the state, should be taxed at even higher rates, is insane.

3. Art- The concept of selling off the DIA art collection to pay off debt is such an unrealistic, short-sighted, and unfeasible idea, I could write a book about it. The DIA is funded by a regional arts tax that is not just a bunch of money that the city can simply divert to pay for retiree benefits. The same goes for much of the DIA art collection. These are donated works of art that have restrictions. The DIA art donors gave their property to the museum for the expressed purpose of it being held in trust and accessible to the public. If they wanted their donations to be liquidated and used to fund city debts and general obligations, then they would have just cut a check or gave their art to the city for auction. While the city may technically "own" the DIA, the DIA collection and operations are funded regionally, with conditions that the donations and taxes be used solely for the DIA, and not general city debts and obligations.

4. Parking- The Detroit municipal parking department, which controls our city garages and parking meters, is a money loser. Contrary to popular belief, the function of the municipal parking department is not to make money, but rather to regulate and insure the availability of parking in the high demand areas in the commercial districts of the city. From a purely short-term cash flow perspective, the city would be better off if they ripped out all the parking meters and eliminated the parking department altogether. This would save the city a bunch of money and hassle, but the result would be that the residents and workers in the commercial districts would just keep their cars there all the time, and there would be no street parking for the customers and clients who come into the commercial districts to patronize the businesses.

5. The Tunnel- The tunnel provides a steady revenue stream for the city's general fund. This money is already being used to help fund retiree benefits, pension payments, and city services. Selling off the city's ownership of the tunnel for a one-time debt payment for the pension fund or other creditors would only put a small dent in the city's current debt, but it would also rob the city of a much-needed stable source of annual revenue.

6. The zoo- The zoo is another example of a cultural asset that does not generate revenue. The city of Detroit subsidized the zoo with annual payments until just a few years ago. As it stands now, the city no longer funds the zoo with tax dollars, and the assertion that the city should try to sell off animals or sell of the property to a developer just to [[maybe) make a few million bucks is absurd. The zoo is not a moneymaker, it is not an extremely valuable asset that can be liquidated for any significant amount of money, but its destruction would be a detriment to the city and region.

7. The airport- City airport is a grossly underutilized asset that would benefit the city and region greatly if it was expanded and fully capitalized. I don't see a scenario where the city could just sell off the airport to some private developer and make a bunch of money on the transaction, but there is a big opportunity here to invest in the expansion and upgrade of the airport to facilitate long-term growth and investment. There is no money to be sucked out of the airport to fund debts and retirees at this point, but if the right strategy and investment were to happen, city airport could be a very strong asset to drive future growth and revenues.

8. Tickets and fines- The city issues plenty of tickets and fines right now. I would certainly like to see stronger ticketing and enforcement of blight and properties that don't meet code, but any increase of ticketing that is actually followed up with enforcement is not likely to result in a significantly increased revenue stream for the city, if it were to result in any kind of increase at all. This is another example of a "source of revenue" that costs more money to collect than it actually brings in.

The point of tickets and fines is not to be a revenue generator for the city. The whole point of issuing tickets and fines for code violations and misdemeanors is not because it is a moneymaker for the government, but rather to discourage people from doing negative actions [[or not doing positive actions), that are detrimental to the community. If issuing tickets and fines paved the way to government solvency, Detroit would be rolling in the dough.

The reason why that isn't happing is because it costs more to issue and collect tickets and fines than what is charged. Just think about how much money it costs to issue and prosecute a simple blight or code violation. If somebody doesn't mow their lawn or leaves a broke-down car on their property, there has to be a complaint filed, then a cop or other city employee has to go out and write a ticket. Then there has to be a court hearing, and then the enforcement of the small fine that the judge orders, if the judge finds the defendant guilty at all, which would require a cop or city worker to show up in court to prove.

How much money does it cost the city to ticket and enforce a simple minor blight violation? A few hundred dollars? Maybe a thousand dollars? For a $100 blight ticket? Even if we doubled the cost of tickets and fines, it still wouldn't be profitable for the city.

9. Bonds- This may be the most ignorant and moronic suggestions on the whole list. The city is literally bankrupt and simply doesn't have enough money to pay its debts, and you think that issuing bonds [[borrowing more money) is a solution to the problem? I don't even know how to respond to an idea that is so profoundly stupid.

10. Property- As I stated earlier, Detroit has the highest property taxes in the state, and one of the highest property taxes in the entire country. The USA Today ranked Detroit #9 in their list of cities with the highest tax burdens in America. Do you really think that increasing the outrageous taxes in Detroit is really the answer?

http://www.usatoday.com/story/money/...rates/5513981/

Erik: Nothing is impossible to the man who does not have to do it himself.