$1.7 million report on city fiscal status being hidden

lilpup · November-08-11, 07:37 AM

probably $1.7 million wasted to tell what we already know, plus maybe a potential scandal or two thrown in and a roasting of City Council for its excessive expense

if they thought hiding it would really help things the cat's out of the bag now to creditors just based on the comments made

http://www.freep.com/article/20111108/NEWS01/111080414/Charles-Pugh-defends-Detroit-City-Council-s-closed-door-meeting-Mayor-Dave-Bing

**Scottathew** · November-08-11, 08:55 AM

I agree with those that say this was a violation of the Open Meetings Act. Also, the report should be made public.

People need to be alarmed. They need to understand that Detroit must:

1) Raise taxes
2) Cut services
3) Operate more efficiently

Or they can do what bankrupt Pugh wants to do, and keep the wool over the eyes of the public that he thinks is too stupid comprehend the financial situation rationally. Pugh wants the public to be ignorantly content until the city implodes.

**antongast** · November-08-11, 08:58 AM

Originally Posted by 48091

2) Cut services

What services? We have services?

**Scottathew** · November-08-11, 10:25 AM

Originally Posted by antongast

What services? We have services?

If you think there are no services to cut, then you're for tax increases.

I don't care how Detroit balances its budget, that's up to the voters of Detroit. If Detroit feels they don't want any more service cuts, then here are your options:

1) Raises taxes
2) Deliver services more efficiently [[more efficient management, lower labor costs)

There's no magic option that allows Detroit to continue to spend more but take in less.

**1953** · November-08-11, 10:32 AM

I think this thread so far makes the case for an emergency financial manager.

The city has the costs of a high-service community, without the perception that people are receiving high amounts of services.

**SWMAP** · November-08-11, 10:55 AM

"Raise taxes"

I will repeat a post here that i posted this morning on the Warrendale thread: the gist of it is: relatively few Detroiters are paying property taxes now!

"I will continue to pay my taxes because I have an ethical code, but I often spend time on the Wayne County Clerk's site and I note that many, many of my neighbors stopped paying taxes years ago. They can stay in their houses for three years and then another year if they promise to pay. But then they don't pay. Then the County will offer to let them buy the house for $500 if it doesn't sell at auction. And now the vast majority of Detroit homes don't sell at auction [[look it up), sothe scammers can pay$500 and start the cycle of not paying taxes again for another four years again. And if you don't pay, pretty sure nothing happens as too many properties for the County to manage. Or you could just move on and leave the house open.
This is the scenario in SW Detroit now. What is going to happen if 2000 City employers lose their jobs? Who/what will require people to pay their taxes so that the City can ever get on it's feet again? It's like horses out of the barn now."

Corktownyuppie noted that Detroit's situation is chaotic and akin to Greece's.

I say: bring on the Emergency Financial Manager [[but someone tough, not Dave Bing)

**Locke09** · November-08-11, 11:07 AM

I'd love to see the report. I want to see how big and complex a $1.7 million dollar report is. I want to see if it contains any data and analysis that wasn't already available to anyone with access to the City's financial system. I want to see why it took an accounting firm 4 months and 1.7 million dollars to project the cash flow for a 12 month period. I want to see if that $1.7 million dollar report is worth the $1.7 million dollars they now have to cut the City agencies by [[and I know which one is being cut by that exact amount - and it's not Finance) in order to fund this unbudgeted expense.

**antongast** · November-08-11, 11:17 AM

Originally Posted by 48091

If you think there are no services to cut, then you're for tax increases.

It depends on your definition of "services," I guess. The kinds of service cuts that are always on the table seem to be things like police, fire, transit--things that ordinary people who live here use and benefit from. Where those services are concerned, the "cut-to-the-bone" cliche doesn't even apply anymore--we've sawed two-thirds of the way through the bone, with no sign of stopping anytime soon.

The kinds of service cuts that are never on the table seem to be things like, well, let's start here. There's always money available when Meijer's wants to locate in a strip mall on 8 and Woodward or when Frank Taylor wants to fuck up another restaurant venture.

I'm not saying getting our priorities straight as a city would necessarily solve the budget issues by itself, but it can't hurt, can it?

**corktownyuppie** · November-08-11, 11:17 AM

Originally Posted by Locke09

I'd love to see the report. I want to see how big and complex a $1.7 million dollar report is. I want to see if it contains any data and analysis that wasn't already available to anyone with access to the City's financial system. I want to see why it took an accounting firm 4 months and 1.7 million dollars to project the cash flow for a 12 month period. I want to see if that $1.7 million dollar report is worth the $1.7 million dollars they now have to cut the City agencies by [[and I know which one is being cut by that exact amount - and it's not Finance) in order to fund this unbudgeted expense.

$1.7MM is pretty much what it costs to hire a CPA firm to perform these kinds of services. And if you think that anyone with access to the city financial system could do this, it might be worth remembering that at one point less than 5 years ago, the city's accounting systems were so bloated and screwed up that there were over 100 individual checking accounts for various city departments held at banks all around the Metro Detroit area -- with no singular point of oversight.

Then add the complex relationships of the city municipal system, the DSWD, the school system, plus different subsets of employees [[both current and former) receiving different gradations of benefits...

Then, throw in all the different bond issues and liens/guarantors...

The report is not worth $1.7MM. It's not like the words are printed onto platinum-bound books of pages made of super-fine goldplating with sprinkles of saffron embedded into the binding.

The $1.7MM is what it costs to pay people to unravel this disastrous mess.

**jt1** · November-08-11, 11:30 AM

Originally Posted by 48091

I agree with those that say this was a violation of the Open Meetings Act. Also, the report should be made public.

People need to be alarmed. They need to understand that Detroit must:

1) Raise taxes
2) Cut services
3) Operate more efficiently

Or they can do what bankrupt Pugh wants to do, and keep the wool over the eyes of the public that he thinks is too stupid comprehend the financial situation rationally. Pugh wants the public to be ignorantly content until the city implodes.

4) Eliminate positions and people that do not contribute to services or any other function.

Granted, that could be part of [[3) but there are a number of positions/people that have jobs and do not cotnribute anything to services or efficiency.

**Scottathew** · November-08-11, 01:00 PM

Originally Posted by jt1

4) Eliminate positions and people that do not contribute to services or any other function.

Granted, that could be part of [[3) but there are a number of positions/people that have jobs and do not cotnribute anything to services or efficiency.

You're exactly right. It's kind of a [[3a).

Someone said on here earlier [[but I don't know if it's true) that Detroit at population 700,000 employs MORE people than Detroit at population 1,800,000.

It seems like it shouldn't be true, but it's very believable.

One of the big problems is that reforming government and balancing the budget will involving cutting wages and cutting positions. In this age it seems like that's an amoral sin, to suggest that the best way to address the issue is to start slashing. However, it's simply true. Detroit must put on its big boy pants and solve some issues, or have an EFM appointed.

I hope Snyder will surprise us and not appoint Bing.

**Locke09** · November-09-11, 03:58 PM

Originally Posted by corktownyuppie

$1.7MM is pretty much what it costs to hire a CPA firm to perform these kinds of services. And if you think that anyone with access to the city financial system could do this, it might be worth remembering that at one point less than 5 years ago, the city's accounting systems were so bloated and screwed up that there were over 100 individual checking accounts for various city departments held at banks all around the Metro Detroit area -- with no singular point of oversight.

Then add the complex relationships of the city municipal system, the DSWD, the school system, plus different subsets of employees [[both current and former) receiving different gradations of benefits...

Then, throw in all the different bond issues and liens/guarantors...

The report is not worth $1.7MM. It's not like the words are printed onto platinum-bound books of pages made of super-fine goldplating with sprinkles of saffron embedded into the binding.

The $1.7MM is what it costs to pay people to unravel this disastrous mess.

Every CPA firm that the City ever brings in relies upon a) the information contained in the City's financial system[[s) and b) the information they obtain from City employees. It doesn't matter whether they are doing an audit or a forecast, they only know what information the City's systems or employees gives them. So the report actually cost more than 1.7 million. It cost that plus whatever it cost in employee resources for producing reports for the firm, providing data extracts, and sharing institutional knowledge.

The CPA firm did not come in and perform a "forensic audit" so they were not "unraveling" anything. They produced a cash flow forecast that looks at whether the cash on hand at any particular point in time will cover the expected expenditure needs at that same point in time. This is not the first time the City has done a cash flow forecast. This is just [[probably) the first time they paid someone 1.7 million dollars to do what can be done internally, unless they have released all the people who know how to do that. I have personally seen very accurate City of Detroit cash flow forecasts that were done internally in the past.

And DWSD is not running out of money in February. And the school system is not part of the City. And the financial systems know what the payroll and benefits costs are collectively and per bargaining unit. Computers exist to handle those complexities. No one sat down with pencil and paper and did this. But a look at the report can tell us the complexities involved and the analysis involved. That's what I said I wanted to see - 1.7 million dollars worth of analysis that didn't come directly out of the City's systems.

**Motor City Sam** · November-10-11, 10:34 AM

Originally Posted by 48091

You're exactly right. It's kind of a [[3a).

Someone said on here earlier [[but I don't know if it's true) that Detroit at population 700,000 employs MORE people than Detroit at population 1,800,000.

It seems like it shouldn't be true, but it's very believable. .

Actually, I've read in a couple of different newspaper articles in the past year that Detroit has about 11,000 city employees, down from the 18,000 plus during one point in the Archer Administration. A lot of cutting has been going on. I don't know how many employees the City had with a pop of almost but my guess it that it was more than 11,000. Of course, I could be wrong and maybe the City ran a lot leaner then, but somehow I doubt it.