Why Is Bing Borrowing?

"With Detroit projected to run out of money in May, Mayor Dave Bing is calling on Michigan's governor to give the city a loan rather than appoint a financial overseer who would have broad power to cut costs and break union contracts.

Mr. Bing, a Democrat who intends to run for a second term next year, said he wants Republican Gov. Rick Snyder to lend Detroit $125 million to $150 million to help the long-struggling city stay solvent over the next 12 months. If Mr. Snyder declines, Mr. Bing would request that the state back Detroit's efforts to secure financing ...


*http://online.wsj.com/article/SB1000...549823476.html

I don't care if Bing begs or borrows, I care what he does with the money he's begging for and borrowing. If he intends to triple Detroit's police force and invest in recreation centers and after school activities then I'm all for it. I'm against any stream of revenue for Bing and his cronies to continue lining their pockets with.

I was wondering why Bing was asking to "borrow" $150m from someone who owes us $250m. Am I missing something here.

Using Detroit's logic, the state owes all local communities billions of dollars. But none of them, including Detroit, is going to get any of that money. Why waste everyone's time saying otherwise?

None of this is really relevant because none of it addresses the problem. If you loan the City $150 million, the City will quickly burn through it. If the City sells the art of the DIA [[which it probably can't, by the way) and makes $150 million, the City will quickly burn through it. If the Governor or the legislature or God almighty gives or loans the City $150 million, the City will quickly burn through it.

If all three things happen, it will take three times as long for the City to burn through all the money, but only three times as long.

The problem is that the City spends money much more quickly than it has money coming in, or any hope of money coming in. Just the amount of money the City owes to its own pensioners is enough to prevent the ship from ever being righted by ordinary measures.

Drastic, drastic changes are necessary, and neither Mayor Bing nor anyone I've seen here on DY has proposed anything close to drastic. Very serious changes are coming. This nonsense about how to find a quick hit of $150M are so is just a flailing about in the air, useless and distracting. The only question is who is going to impose the changes, and how.

Lets look at it this way. Detroit needs to diversify. It also needs to build on its strengths. Why on earth would he be willing to start selling off a drawing card like the DIA piecemeal? The DIA is one of the few things the City has that is truely world class. It does bring tourists or gives those who are here for other reasons a reason to stay here longer.

You don't diversify by giving away your best stuff, you use it to build upon. Thats why you are seeing things like MOCAD, the Wright Museum, the Inn to the north, and the Science Center [[ok not the best example) expand in the area. They draw on the synergy. Everyone wants better transit along Woodward, but to reduce draws along the corridor will reduce the ridership.

Should the City get the loan, my biggest question is how is it going to pay it off? You are seeing reductions in property values that lead to reduced property taxes. While many companies are heading downtown, many of the businesses in the neighborhoods are shutting down so there goes that income tax revenues.

Hey gang--

We just got this statement from the mayor's office, clarifying this story.

"The Mayor has no specific plans to ask Gov. Snyder for a $125-$150 million. Mayor Bing was simply responding to the Wall Street Journal reporter's question about whether the Mayor would ask for "bridge funds." The Mayor replied, "That's possible." When the reporter later asked how much he would like to ask for, the Mayor responded with that range, but never said he planned to ask for such funding."

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Originally Posted by Novine

Using Detroit's logic, the state owes all local communities billions of dollars. But none of them, including Detroit, is going to get any of that money. Why waste everyone's time saying otherwise?

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no. the city made a deal with the state years ago and the state hasn't lived up to its end of the bargain

Sorry but you're wrong. There was no "deal". A deal is where you negotiate between two parties. What happened was that a revenue sharing plan and change in the city's income tax was imposed by the Legislature on Detroit just as the same revenue sharing changes were imposed on all other communities. The city had no ability to block those changes. Later, the Legislature changed the revenue sharing for Detroit and all other communities. Again, Detroit had no ability to block those changes. No deal and no dollars.

LMAO. The State made a deal for revenue sharing. Yes they changed it THIS YEAR. They LOWERED it not eliminated it. However they still have NOT Paid what was agreed to in the past. The State has acknowleged that they owe us this money. This is no secret. The State owes us Back Pay from the years they didnt pay us. Thats why its $250m. WTF are you talking about. Anti Detroit Hater

There are a couple of things going on here that I would like to contribute to the discussion.

First, there are quite a few people who feel as though current city leadership is directly responsible for the existing mess. I agree 100% that current leadership has not done enough to align services with revenues, but I believe that the existing situation, while lumbering towards the current state for decades, was greatly accelerated in the past 3-4 years. I understand that we have had annual deficits going back to 2005 or so, but the deficit "spread" has greatly increased since the recession began due, in large part, to the greatly accelerated loss of population since then. In fact, I would be willing to believe, just based on anecdotal evidence, that a significant portion of the ~250,000 residents lost between 2000 and 2010 probably occurred in the last few years due to increased availability/affordability in the suburbs. I've said that to portray that, for the past few years, the situation has been getting much worse, much faster, to the extent that, by the time anyone gets a change to analyze the current facts, the facts have already changed.

This has exacerbated an already untenable situation and requires a great deal of leadership to be able to make the citizens understand what the choices are. I, personally, would have liked for the Mayor, as soon has he was aware of the gravity of the situation, to address the stakeholders of the city [[residents, businesses, visitors, etc) and explain what the options are. For instance, we could have reduced [[fill in the blank) service, or we can increase taxes, fees, whatever to stabilize the current situation. Give people the information, and let them inform the process on what they desire from their government and determine how much they are willing to pay for it. I know the naysayers will say that that type of political discourse cannot happen in Detroit for whatever reason, but I give most Detroiters more credit than that.

Some of the challenges I believe Bing has been facing include the fact that he was a "businessman", and frankly, ignorant as to what government should/could do, or even how it does it. I think his private sector approach [[I call the shots) has handicapped his ability to lead. He wants to have all the answers, and in the process of trying to get them, he has lost control.

All that being said, I do not know what the answers are. Part of the problem is that many of the challenges were caused by private sector dis-investment [[by moving shop out of the city), and the solutions to those problems also require private sector actors willing to make an investment much like Dan Gilbert. However, there has been such a long period that leadership has failed to live up to expectations, that it is now quite difficult to regain that confidence.

At the end of the day, there must be an evaluation of what exactly is the role of city government and what services must it provide. Then, there must be an honest evaluation of what resources is there to provide those services at a reasonable cost. Frankly, this is where Bing's business background could have helped, but I just think he wanted to be all things to all people based on very bad political advice.

Leadership during tough times is what determines your mettle. Unfortunately, it appears as though Mayor Bing is not quite living up to the task, but he has had a lot of help in failing the city. His constant revolving door of aides, while trying to give the appearance of him being tough and not accepting failure, I think has had the opposite effect; it has cowed any of his aides who may have been gutsy enough to tell him the truth. The latest flap over the WSJ statement is a perfect example.

Sorry for the ramble, but there is so much to be upset about......

And a very good ramble at that !

This has gone on long enough. How much more time is it going to take to get these concessions from the unions finalized? I can't believe Snyder is letting this farce go on any longer. It's been over three months now that they're been evaluating the finances, and every week Bing and the council are claiming they can solve the problem. The city runs out of cash in what? April-May? Were not talking several months, were talking weeks. And now he wants to borrow money? Isn't that saying, "shit, well, were not gonna get this done on time. We need money to prolong this."?!?!?!?!!?! This is just getting ridiculous I think.

I won't waste my time asking you to provide us proof of "this deal" because none exists. The state made all kinds of promises about state revenue sharing over the years to all local communities. None of them are getting what the state promised and haven't been for years. If you think that just started today, you haven't been paying attention.

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Originally Posted by Novine

I won't waste my time asking you to provide us proof of "this deal" because none exists. The state made all kinds of promises about state revenue sharing over the years to all local communities. None of them are getting what the state promised and haven't been for years. If you think that just started today, you haven't been paying attention.

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WRONG AGAIN: Grand Rapids is the prime example of why your statement is FALSE.

Please, don't just write "Grand Rapids" - add a citation from a respected news or similar source to prove your point. Just saying it and expecting educated people to believe you is sloppy and undermines your credibility.

Detroit does not need loans. It needs privatization.

Why KING BING browing more money, just to keep Detroit floating until it sinks.

A key thing being lost in this discussion are the terms of any loan versus debt payments the city is already making. The city currently is carrying a lot of debt to many creditors. If the city can take a loan from the state that is longer term, lower interest, or both and use it to pay off some of the existing debt, then it will help the city's bottom line. The amount of total debt owned remains the same, but your monthly payments go down. That is an action that will help Detroit remain solvent in the short term while it hopefully solves its fiscal problems that are structural in nature. It's the same reason why people are trying to refinance their homes if they can.

I think people are too quick to shoot this down because, if the terms are right, this is a smart move for the city to make and it will give them more flexibility.