Pick the date for receivership

[EastSider]

There are two different "receiverships".

1, the Governor steps in, with a Financial Manager who inturn has the power under almost Imperial Powers to slash the budget. Before Bankrupcy the Financial Manager would enter into arbitration with the labor Unions and could renegotiate contracts with suppliers. If the EFM can't balance the books, that Manager could declare bankrupcy which would wipe out all debts and contracts and send the whole mess to Court.

In this scenerio the political power structure is pushed to the corner and becomes a toothless cur.

2, The other system would avoid the Governor altogether. The City would declare Chapter 9 Bankrupcy, resulting in the current political strong-mayor structure to operate as its own Financial Manager.

Taking into the account that Governor Granholm would rather eat glass than take over Detroit and all of its Democratic voters, I'll vote for Chapter 9. On Monday September 14, 2009 Bing will file the paperwork in Federal District Court.

However, on the afternoon of the 14th, the Unions will agree to concessions thereby avoiding the delaying Chapter 9 Bankrupcy until April 10th, 2010.

State law does not allow a municipality to file bankruptcy without the state's consent. PA 72 of 1990 was passed after Ecorse's bankruptcy filing to mandate a review by the state.The bankruptcy court would appoint the receiver, and it's not guaranteed that anyone currently in the city government would get the court's nod.

[gnome]

check out this article:

http://www.detnews.com/article/20090...ancial-manager

You're right, a Financial Manager would have to take control of the city, but according to the article no Michigan city has ever filed bankrupcy. Maybe the author meant no city has ever filed Chapter 9. hmm Sounds like you're in the know on this issue, I'd love to learn more.

[Hypestyles]

...whatever it takes to get the city in proper financial/government-size shape.. all the talk about repopulating the city means nothing when there is instability/low quality in services, schools, public safety..

[lilpup]

New York State stepped in a massive way, forming the Municipal Assistance Corporation which sold $10 billon dollars in bonds to prevent NYC from going broke. In exchange, the city massively improved its financial controls and budget process. I do not think the US government participated in the bailout.

"New York City Seasonal Financing Act" - October 1975 - allowed $2.3 billion in loans annually until its expiration in 1978, at which time it was followed by the "New York City Loan Guarantee Act of 1978" which provided continued assistance in the form of Federal loan guarantees through its expiration in June 1982. All told, the US government helped prop up NYC from 1975 until 1986.

http://www.propublica.org/special/government-bailouts

http://books.google.com/books?id=a67...Act%22&f=false

[3WC]

For many reasons Chap. 9 is more appealing than a state receivership. However, it's true that a municipality may not file for Chap. 9 without State approval; that's a Code condition.

A municipality must file a "Plan" contemporaneously with the filing on the Petition. That almost requires a pre-packaged bankruptcy. I'll bet that's an impossibility.

Als, the cost would be prohibitive. Detroit doesn't have the money to go into bankruptcy. It will cost GM well over $200 million in legal fees before it's done; Detroit's would cost a lot less but far more than itcan afford.

For information on Chap. 9, go to:

http://www.uscourts.gov/bankruptcyco.../chapter9.html

[E hemingway]

Sept 18. It looks like Bing is just running out the clock until the money is gone, which will happen a lot quicker than the conventional wisdom suggests.

[croweblack]

Can't wait for this.

The receiver needs to be someone with NO political ties to Detroit or the democratic machine.

Granholm will never appoint a receiver for Detroit so that leaves poor mike cox holding the bag.
He needs to find a black republican so that chants and cries of "racism!" will fall on deaf ears

I am really looking forward to all the corruption that will be uncovered, the water department alone will be awesome!!

[Haikoont]

Just to get some round numbers, there are approximately 13,000 city employees. If the average employee makes $50,000, a 10 percent cut is $5,000. So $5,000 times 13,000 saves $65 million, barely one-seventh of the projected $350 million deficit. If Bing lays off 1,000 employees, even if their total compensation averages $100,000, that's only $10 million more in savings.

There is a lot more pain to come.

[EastSider]

check out this article:

http://www.detnews.com/article/20090...ancial-manager

You're right, a Financial Manager would have to take control of the city, but according to the article no Michigan city has ever filed bankrupcy. Maybe the author meant no city has ever filed Chapter 9. hmm Sounds like you're in the know on this issue, I'd love to learn more.

That article borders on crap, even allowing for the current state of Detroit's dailies.

A "receiver" can only be appointed by a court, so this sentence:

Michigan law allows for Chapter 9 bankruptcy filing -- as long as an emergency financial manager recommends it, meaning Detroit would have to be placed in receivership first.

is nonsensical. It needs to be in receivership before a receiver can be appointed? No.

The city of Ecorse was placed under court control in 1986, and Wayne County Circuit Court appointed Lou Schimmel as the city's receiver. The state watched what developed and created PA 72 of 1990 to avoid court filings by municipalities.

[Stosh]

From the State of Michigan website regarding PA 72 of 1990:

While the authority conferred by the Act upon emergency financial managers may, in some respects, resemble the authority exercised by receivers, the two are not synonymous. Receivers generally are appointed and supervised by courts, as for example in bankruptcy proceedings, their purpose being to take custody of and preserve property placed in receivership. By contrast, the purpose of emergency financial managers, as noted above, is to exercise the authority conferred upon them by Act 72 to resolve financial emergencies in units of local government.

Pursuant to Title 11 of the United States Bankruptcy Code, units of local government may seek protection as a debtor under Chapter 9 of the Code only if specifically authorized "by State law or by a governmental officer or organization empowered by State law." In Michigan, the only such authorization is Section 22 of Act 72 which authorizes emergency financial managers to proceed under the Bankruptcy Code after giving notice to the Board, and unless the Board disapproves.

So the "emergency financial manager" functions similar to a reciever in authority, just in a legislative sphere of influence.

http://www.michigan.gov/treasury/0,1...8770--,00.html

[Novine]

"I am really looking forward to all the corruption that will be uncovered, the water department alone will be awesome!!"

The water department wouldn't be part of any receivership plan. It's not in a deficit.

[gnome]

Alright, so let's say you get appointed the EFM over ther City.

What do you cut, sell, trade or bater for?

[mwilbert]

"New York City Seasonal Financing Act" - October 1975 - allowed $2.3 billion in loans annually until its expiration in 1978, at which time it was followed by the "New York City Loan Guarantee Act of 1978" which provided continued assistance in the form of Federal loan guarantees through its expiration in June 1982. All told, the US government helped prop up NYC from 1975 until 1986.

http://www.propublica.org/special/government-bailouts

http://books.google.com/books?id=a67...Act%22&f=false

I stand corrected. Thanks for the info.

[Stosh]

"I am really looking forward to all the corruption that will be uncovered, the water department alone will be awesome!!"

The water department wouldn't be part of any receivership plan. It's not in a deficit.

If it's employees are city employees, would they not get their wages cut as well as others in the City's employ? I'd bet they would, profit or not. You can't separate pieces of the City just because they are profitable.

[EastSider]

If it's employees are city employees, would they not get their wages cut as well as others in the City's employ? I'd bet they would, profit or not. You can't separate pieces of the City just because they are profitable.

The water system is self-funding, and water revenues can not leak [[ha!) over into the general fund budget. At most the EFM would separate out any cross-over between the water department and the general city government and strengthen the separation.

[Novine]

"If it's employees are city employees, would they not get their wages cut as well as others in the City's employ? I'd bet they would, profit or not. You can't separate pieces of the City just because they are profitable."

The water department is called an enterprise fund and its books are completely separate from the rest of the city's funds. The mess at city hall has no effect on the operations of the department or the pay of its employees.

[Locke09]

I believe the only employee that escaped a salary cut at the Water Dept the last time around was the director, by order of the federal judge. I seem to recall it being a big issue because DWSD employees took cuts but the director didn't.

DWSD employees belong to many of the same unions as other City employees. They have many of the same titles as other city employees. They will not be exempted from pay cuts. Those who have to perform emergency work [[like fixing water main breaks) will operate much the same way other employees work who are involved in 24/7 operations [[like cops). It will be hard for any 24/7 operation to do furloughs, and if they do, they will probably more than make up for it in overtime when they still have to be called in.

Also, when there are layoffs, employees at DWSD are "bumped" if someone from another agency with the same title but more seniority is laid off. So, even if DWSD says they are not running a deficit and don't need to do any layoffs, their people are not safe.

In short, they won't go unscathed.

And their books are not separate. Their bank accounts are. But there is no reason to have separate books just because you have separate funds. So, they use the same financial system/database/book the rest of the City uses. This includes the same Purchasing system, which is tightly integrated with their Work Order and Inventory system. They do have more control over thier transactions and records than other non-Enterprise agencies. But when the City is talking about closing its books, its talking about DWSD records as well. One city. One set of books.

Finally, I don't think the fact that they don't have a deficit exempts them automatically. Any increased efficiency will help keep rates down. If they are as efficient as they can get, then no, there should be no cuts there.

[Novine]

Locke09.

Whether DWSD employees see wage or position cuts has nothing to do with what's going on with the rest of the city's budget other than the scenario you mentioned of employee bumping. It doesn't matter whether they use the same accounting system. The funds are kept completely separate and any reductions taking place at DWSD have nothing to do with what's going on in the rest of city government.

[skyl4rk]

Not even if I bring Cheetos?

Let's split the date and let the time of the announcement decide between us. You can have the morning, I'll take the afternoon.

Well, the press release is going to happen at 11:00am so I'm OK with that.

Detroit is going to be the whipping boy to scare the state unions. Because the State of Michigan is sliding down the same path as Detroit.

[E hemingway]

Alright, so let's say you get appointed the EFM over ther City.

What do you cut, sell, trade or bater for?

Unpopular ideas that could cut a lot of costs quickly:
Turn Belle Isle and Rouge Park over to the Metro Parks Systems.
Disband DDOT and strike an agreement with SMART
Disband city health dept and strike agreement with Wayne County Health Dept
Disband DPD and strike deal with Wayne County Sheriff for a regional police authority
Sell off all non-essential city property holdings

[Stosh]

Alright, so let's say you get appointed the EFM over ther City.

What do you cut, sell, trade or bater for?

Unpopular ideas that could cut a lot of costs quickly:
Turn Belle Isle and Rouge Park over to the Metro Parks Systems.
Disband DDOT and strike an agreement with SMART
Disband city health dept and strike agreement with Wayne County Health Dept
Disband DPD and strike deal with Wayne County Sheriff for a regional police authority
Sell off all non-essential city property holdings

Merging the DPD would at least remove the consent judgement. That's 2+Million right there.

Doing what Andy Dillon proposed [[insurance pool coverage) just for the city workers alone would be an improvement. How much out of that 700 million quote would the COD workers be? And it wouldn't take a legislature to do it either.

Charge a fee for upkeep of Belle Isle. Metroparks don't want Belle Isle, they have their own problems.

Freeze wages now. Early retirements. New hire wage cuts. Less benefits for new hires. No defined pension for new hires, instead a matching 401K.

[48302]

Merging the DPD would at least remove the consent judgement. That's 2+Million right there.

Doing what Andy Dillon proposed [[insurance pool coverage) just for the city workers alone would be an improvement. How much out of that 700 million quote would the COD workers be? And it wouldn't take a legislature to do it either.

Charge a fee for upkeep of Belle Isle. Metroparks don't want Belle Isle, they have their own problems.

Freeze wages now. Early retirements. New hire wage cuts. Less benefits for new hires. No defined pension for new hires, instead a matching 401K.

i like the way you think, stoshy

[skyl4rk]

Since we are into October now, anybody want to hedge their bets?