Mayor Bing expected to unveil plan to privatize Detroit bus, lighting systems

[begingri]

By Steve Neavling and Matt Helms

Detroit Free Press Staff Writers

Detroit Mayor Dave Bing is expected to announce today an effort to privatize management of the city's beleaguered bus system and its troubled public lighting department, according to people who have been briefed on the mayor's sweeping plans to slash costs and stave off the state appointment of an emergency manager.

Combined, the two departments cost the city more than $100 million a year to subsidize.

Bing's office was tight-lipped about the 6 p.m. address he plans to deliver liveon television from the Northwest Activities Center but said he will address the city's fiscal crisis and service issues, including transportation and lighting.

"Mayor Bing will provide a frank assessment of the city's fiscal condition and services," mayoral spokesman Dan Lijana said Tuesday. "He will offer solutions to long-standing service problems."

Council members and restructuring experts said Tuesday that they would be skeptical of the mayor's plan unless it includes pension and health care concessions from unions, adding that's the only way for the city to avoid running out of cash.

"You can't fix the structural imbalance until you deal with the rising costs of health care and pensions," said Marcus Hudson, a local expert on restructuring financially challenged businesses and municipalities. "The city is at a point where cutting doesn't help because the city made bad financial decisions by not dealing with these union issues earlier."

The catalyst for the address is a devastating report by the Ernst & Young accounting firm, ordered by the city and paid for with taxpayer money, that shows the city's finances are so slim that even laying off 2,200 employees would delay insolvency only until July.

Continued at: http://www.freep.com/article/2011111...ighting-system

[Scottathew]

I'm all for this, 100%.

Although, ultimately I'd like to see DDOT and SMART combined into a regional authority.

[Tig3rzhark]

I'm all for this, 100%.

Although, ultimately I'd like to see DDOT and SMART combined into a regional authority.

I've been looking forward to this ever since I've been riding on a bus. However, efforts have shown that hostilities still exist between the city and suburbs, and until this comes to an end, we may not live to see an efficient regional transportation authority established in southeastern Michigan.

[internet_pseudopod]

So the lights will be privatized. The city won't be able to pay the bills and they will be off anyway. Same for the buses, it is a money loser utilized by the poor when they don't pay enough to make a profit look for the same service cut backs.

[riviera]

And which private entity would feel that this would be a good investment anyway?

[szla]

Is Detroit allowed into Smart? Why not drop out of the transit business, accept the small millage that Smart charges and join. If cities within the tri county area can opt out why cant Detroit opt in?

[Hypestyles]

I hope that bus service can be radically transformed for the better. I'm not holding my breath for it to happen, but I want it to happen. I believe that a merged system will be for the better for all in the city and region in the long term, but the political and racial chasms seem insurmountable..

[antongast]

Is Detroit allowed into Smart? Why not drop out of the transit business, accept the small millage that Smart charges and join. If cities within the tri county area can opt out why cant Detroit opt in?

Because Detroit needs a totally different kind and scope of service than what SMART currently offers. There's no evidence that SMART is capable of providing Detroit with the kind of transit service it needs, and no indication that they're interested in trying. In fact, they're eliminating all their existing service inside the city limits in December, dumping all that extra ridership onto the already-overtaxed DDOT arterial routes.

[Scottathew]

Because Detroit needs a totally different kind and scope of service than what SMART currently offers. There's no evidence that SMART is capable of providing Detroit with the kind of transit service it needs, and no indication that they're interested in trying. In fact, they're eliminating all their existing service inside the city limits in December, dumping all that extra ridership onto the already-overtaxed DDOT arterial routes.

SMART is dumping Detroit service because of budgetary issues, not because they are dis-interested, because having two systems that partially overlap and partially don't just doesn't make sense.

A combined system would be more efficient to run, and would also be more efficient to the passengers that use it, because imaginary political boundaries won't cause them to get off one bus and onto another.

I'm a suburbanite that is 100% for a combined system.

[adamjab19]

Did anyone catch Channel 7's 2020 spot after the speech? One point of it went like this:

Charles Pugh: "Come on John [[AFSCME union leader) we need you to come to the table sooner than next year to discuss."

John: "We will come to the table when it is time next year."

Nolan Finley: "You guys aren't going to have jobs by then, you better go now!"

This John guy was not backing down for nothing! He looked like an idiot. I know you need to stand for something but damn I say at this rate in the City of Detroit you better stand for just having a job! I guess him and his union people are going to be the first ones flushed in the new year. I say take the pay cut and if the workers don't like it they can go elsewhere for work. The city's management is fuct. So there are going to be some fuct up ways to fix it. Get on board or get out!

[antongast]

SMART is dumping Detroit service because of budgetary issues, not because they are dis-interested, because having two systems that partially overlap and partially don't just doesn't make sense.

A combined system would be more efficient to run, and would also be more efficient to the passengers that use it, because imaginary political boundaries won't cause them to get off one bus and onto another.

I'm a suburbanite that is 100% for a combined system.

I'm not against a combined system in principle, but a combined system will still need adequate funding in order to provide adequate service. Assessing the SMART millage in Detroit won't buy anywhere near the density of coverage or service frequency that DDOT, even in its current bare-bones form, provides here. Look at how many SMART routes run through Warren or Sterling Heights and how often they run at which hours, and then take any comparably-sized chunk of Detroit and do the same thing. Detroit has orders of magnitude more service, even taking the poor schedule adherence into account. If you want to combine the systems, fair enough, but it's going to take a lot more to make it work than just getting rid of DDOT and treating Detroit like any other opt-in community with a handful of buses running through it.

As far as SMART dumping Detroit service "because of budgetary issues," that's precisely the point. It's not just DDOT that's cash-strapped. And if you think SMART providing service in Detroit "doesn't make sense," just try to squeeze yourself into a DDOT Woodward or Gratiot bus the day after those cuts go through. You can't take two high-ridership bus routes, get rid of one of them, and expect the other to pick up the slack with no additional funding.

[Scottathew]

I agree funding would be an issue. I'd like to see the same millage charged across the entire region. Although Detroit would get more service and routes, I wouldn't want them charged more. Some folks may call that subsidizing Detroit buses, but I wouldn't wholly agree with that. Having a solid public transit system benefits riders, businesses, and motorists too. It benefits motorists because there would be less traffic and wear and tear on the roads if more people were taking buses.

Also, mass transit is much more environmentally friendly than using individual vehicles, which is another shared benefit for everyone, regardless of whether or not you use the system.

Now, convincing my fellow suburbanites to to fund such a system, that might take some work. Some folks think like me. While other folks are narrow minded and don't realize that even if they don't use the system that there are still benefits to it.

[Dexlin]

After hearing the weak tea Bing offered last evening, the city is toast. The EFM is already being cooked up, and Snyder when asked about the speech implied that. You didn't have to read between the lines too much to see that Bing begging for reinstatement of a higher level of renvenue sharing [[*snort* yeah right, not with this tea party legislature) was when Snyder made the decision that Bing doesn't have the will to do what is needed. The police and fire pay cuts were particularly odious, not because they went to far, but because you're only talking $12 million for next year which wouldn't even put a dent in the deficit, and on top of that would only kill moral and push people into retirement or resignation.

This was not a serious speech. If Bing's fiscal plan is almost exclusively dependent upon grabbing back money from the legislature, a self-governed Detroit was put out of reach, last evening. Goodbye, mayor; it was nice knowing you. lol

[townonenorth]

I watched that speech and was amazed at the lack of... well, everything. Bing's an empty shell. How he managed to keep Bing steel afloat is amazing to me. I guess that the way it is when you are propped up by the Big 3 then the legs are kicked out from under you.

[jt1]

As someone that has neither a job with or a pension from the city I'm really stuggling to see why an EFM would be a bad thing for me.

As I see it the EFM:

1. May make sweeping contract changes or void contracts. It's unfortunate for those that lose there jobs it should not reduce the services or quality of services I receive

2. Services may be changed but, with a few exceptions, I'm not sold there would be any negatives to that

3. There would be a single person that could make decisions as opposed to the non-sensical bureacracy in the city. Sure, there may be some wrong decisions but at least something would be decided and done. I'm willing to risk a bad decision or two as opposed to maintaining the status quo.

4. Yes, this takes some decisions out of the hands of voters but it is clear our elected officials, and often our residents, have made the decisions that have gotten things to this point.

So can anyone tell me how, as a resident with no pension or job with the city how I will be any more negatively impacted compared to how the city is run today?

[Novine]

"So can anyone tell me how, as a resident with no pension or job with the city how I will be any more negatively impacted compared to how the city is run today?"

There will be a lot fewer employees delivering fewer city services than today. Maybe you won't notice a difference. But I expect that many people will notice the difference. There will be a lot of unhappy employees too. I expect many people to notice that as well.

Your taxes and fees may go up. Most EFMs haven't relied solely on cutting services to bring revenues and expenditures in line. Let's be real, Detroit's been providing its current level of service through deficit financing. That's going to end. That means fewer services at the same or greater cost to taxpayers.

[Danny]

KING BING has gotten Detroit and its city unions right where he wants it. In his corporate hands. Now its time for them to surrender their services to him or be destroyed!

I can see the dictatorship coming and BING will be the tyrant!

Detroit city services will be privatized. Ghettoes gentrified. Low-income folks and poor getting evicted from their Detroit ghettohoods. A fast growing yuppified Detroit is coming. OCP is here!

[SWMAP]

There will be a lot more people out of work! And for many of them, a work experience in the beauracracy that is the City means that they will never get another job. They may be too old; or skills too old and/or too narrow to compete in this job market.

Think about two more thousand people out of work in this city. It will be bad.

[jt1]

"So can anyone tell me how, as a resident with no pension or job with the city how I will be any more negatively impacted compared to how the city is run today?"

There will be a lot fewer employees delivering fewer city services than today. Maybe you won't notice a difference. But I expect that many people will notice the difference. There will be a lot of unhappy employees too. I expect many people to notice that as well.

Your taxes and fees may go up. Most EFMs haven't relied solely on cutting services to bring revenues and expenditures in line. Let's be real, Detroit's been providing its current level of service through deficit financing. That's going to end. That means fewer services at the same or greater cost to taxpayers.

Good points about taxes and services that may not impact me but may impact others.

As far as unhappy employees I don't get the sense that morale is that good to start with. Certainly it may be impacted but I'm curious how much lower it can get.

[jt1]

True but I'm curious how many of the impacted employees still live in the city. I also think it will be short term pain for long term benefits as the city should supply services, not employment.

It is however unfortunate for those that will lose their jobs. Hopefully the good employees are retained and the poor employees are let go.

[swingline]

KING BING has gotten Detroit and its city unions right where he wants it. In his corporate hands. Now its time for them to surrender their services to him or be destroyed!

I can see the dictatorship coming and BING will be the tyrant!

Detroit city services will be privatized. Ghettoes gentrified. Low-income folks and poor getting evicted from their Detroit ghettohoods. A fast growing yuppified Detroit is coming. OCP is here!

Good post Danny. I'm not sure that "gthettoes" is spelled with an "e" though.

[7miledog]

Like others, I was frankly very underwhelmed by Bing's presentation. There are a number of areas where consolidation of the bureaucracy can occur just by reviewing the city budget. For example, why are there separate Budget and Finance Departments [[consolidate into Dept. of Treasury or Administrative Services along with Dept of Admin Hearings, Aud General, Planning/Development, HR, Law, Zoning Appeals, and IT); why aren't the Elections and Health departments contracted to the county; why aren't the Departments of Public Works, Recreation, Transportation, Workforce Development, Bldgs/Safety and Human Services consolidated into a Department of Public Services and Police, Fire, and Muni Parking into a Dept of Public Safety; etc?!? Whether that translates into actual dollar savings is debatable, but it would go to show that the fat at the top [[in the form of all these Directors, Deputy Directors, etc) is being trimmed.

Per the city workforce morale issues, frankly many of them are the reason that Republican criticism of government has any validity. The service is piss-poor and many just don't give a damn when a responsible, tax-paying citizen calls to get an empty house boarded up or anything else. The unionized workforce of Detroit is it's own worst enemy and I frankly believe that 1/3 of the shitty employees could be fired today without any adverse impact on service delivery because at least that many simply aren't doing anything. And this from an ardent union supporter.

Detroit WENT to hell in a hand-basket several years ago and we are simply watching the first public death of a major US city in history.

[erikd]

The core financial issue facing Detroit is the skyrocketing costs of pensions and health care. We must have major restructuring in these two areas for the city to be solvent. There are multifarious ways to accomplish this crucial task, and with the right combination, we can drastically reduce costs while streamlining city government and improving services.

1. Completely overhaul the city pension system. The landmark 2007 UAW contracts with the big three could serve as a template for this. Pension plans have been eliminated in the private sector because they have become simply unaffordable. The public sector has no choice but to follow suit. There are a number of options, ranging from a gradual transition from pensions to 401K plans, to an EFM simply canceling pension plans with contract terminations. The best solution probably lies somewhere in the middle, but this is a crucial element to any fiscal restructuring.

2. Health insurance costs must be contained. According to the E&Y report that just came out, health insurance costs for the city have increased 62 percent in the last three years. The city must find a way to stabilize health insurance costs. The private sector is responding to these skyrocketing heath insurance costs by drastically increasing copays, deductibles, reducing coverage levels, and cutting people off the health care plans, through increased contacting, layoffs, and replacing full-time employees with part-timers. Unfortunately, the city must follow suit in order to become solvent.

3. The city must combine or eliminate all redundant departments and positions. There are a ton of examples of this, from the multiple city planning departments, which should combined into one, to the health and human service departments, which should be eliminated and provided at the county/state level, to DDOT, which should be combined with SMART to form a regional authority. The regionalization of COBO was a good start, and we need to do more of it.

In the instance of DDOT, there would be many benefits, including the reduction of city employees that we have to pay health care and benefits for, better service by eliminating duplicate routes and ending the insane practice of forcing riders off one bus and on to another at city limits. Also, the lack of a regional transportation authority disqualifies metro Detroit for much federal transit funding, and we would qualify for tens, if not hundreds of millions in new federal funding just by merging DDOT and SMART. This is a no-brainer.

4. Create more public/private/non-profit partnerships to fund and operate non-essential city services. The city has done some of this in recent years, with Campus Martius Park, the Riverwalk, and Eastern Market standing out as great examples of how well this can work. Belle Isle and many other city assets should follow suit. Perhaps a partnership with the YMCA and other non-profit groups could help fund and operate neighborhood community centers.

4. Work with the state to put non-violent criminal offenders, parolees, and welfare recipients to work. The courts already hand out community service in sentencing, so why can't we expand this practice to include maintenance of city parks, painting school classrooms in the summer, picking up trash and mowing grass in vacant lots, etc.

These are just a few practical solutions off the top of my head that would greatly reduce the cost of city government and improve city services at the same time. The biggest obstacle to most of these suggestions are the existing union contracts, but these contracts will have to be drastically modified or simply voided in the near future, so we should take this opportunity to change the way that we think about delivering services as well.

[corktownyuppie]

The core financial issue facing Detroit is the skyrocketing costs of pensions and health care. We must have major restructuring in these two areas for the city to be solvent. There are multifarious ways to accomplish this crucial task, and with the right combination, we can drastically reduce costs while streamlining city government and improving services.

1. Completely overhaul the city pension system. The landmark 2007 UAW contracts with the big three could serve as a template for this. Pension plans have been eliminated in the private sector because they have become simply unaffordable. The public sector has no choice but to follow suit. There are a number of options, ranging from a gradual transition from pensions to 401K plans, to an EFM simply canceling pension plans with contract terminations. The best solution probably lies somewhere in the middle, but this is a crucial element to any fiscal restructuring.

2. Health insurance costs must be contained. According to the E&Y report that just came out, health insurance costs for the city have increased 62 percent in the last three years. The city must find a way to stabilize health insurance costs. The private sector is responding to these skyrocketing heath insurance costs by drastically increasing copays, deductibles, reducing coverage levels, and cutting people off the health care plans, through increased contacting, layoffs, and replacing full-time employees with part-timers. Unfortunately, the city must follow suit in order to become solvent.

3. The city must combine or eliminate all redundant departments and positions. There are a ton of examples of this, from the multiple city planning departments, which should combined into one, to the health and human service departments, which should be eliminated and provided at the county/state level, to DDOT, which should be combined with SMART to form a regional authority. The regionalization of COBO was a good start, and we need to do more of it.

In the instance of DDOT, there would be many benefits, including the reduction of city employees that we have to pay health care and benefits for, better service by eliminating duplicate routes and ending the insane practice of forcing riders off one bus and on to another at city limits. Also, the lack of a regional transportation authority disqualifies metro Detroit for much federal transit funding, and we would qualify for tens, if not hundreds of millions in new federal funding just by merging DDOT and SMART. This is a no-brainer.

4. Create more public/private/non-profit partnerships to fund and operate non-essential city services. The city has done some of this in recent years, with Campus Martius Park, the Riverwalk, and Eastern Market standing out as great examples of how well this can work. Belle Isle and many other city assets should follow suit. Perhaps a partnership with the YMCA and other non-profit groups could help fund and operate neighborhood community centers.

4. Work with the state to put non-violent criminal offenders, parolees, and welfare recipients to work. The courts already hand out community service in sentencing, so why can't we expand this practice to include maintenance of city parks, painting school classrooms in the summer, picking up trash and mowing grass in vacant lots, etc.

These are just a few practical solutions off the top of my head that would greatly reduce the cost of city government and improve city services at the same time. The biggest obstacle to most of these suggestions are the existing union contracts, but these contracts will have to be drastically modified or simply voided in the near future, so we should take this opportunity to change the way that we think about delivering services as well.

These are all very practical, reasonable ideas that will have a major effect on the financial state. The issue of pensions and health care are no different for Detroit than they have been for every major corporation whose heyday was in the 60s and 70s. The people who planned these benefits never thought that healthcare costs would spiral out of control or that people would live well into their 80s and 90s.

Craig Fahle [[WDET) and Stephen Henderson [[Free Press) were talking on WDET today about how for every $1 in expenses, $0.40 is used to pay for the costs of our retirees.

So the question lies here: can the union heads and city leadership get these things done? Or will an EFM have to come in?

[Novine]

"There are a number of options, ranging from a gradual transition from pensions to 401K plans, to an EFM simply canceling pension plans with contract terminations. The best solution probably lies somewhere in the middle, but this is a crucial element to any fiscal restructuring."

Any plan involving a transition to 401ks will actually cost the city more in the short-term. It might save dollars in the long-term but won't help the city's current cash crunch.

Pension benefits are protected by the state constitution. An EFM doesn't have the authority to cancel existing pension benefits.