State to Give Council Consent Agreement

[mam2009]

First of all, does anyone find it ironic that the State is presenting this Consent Agreement on the 13th day of the month which happens to be 3/13 or 313, Detroit's area code?

Anywhooo ...ironic observations aside, IF what the TV media says is true, the Governor will not be offering any cash assistance to the City in the agreement. Why would this Mayor & City Council agree to that? That can't possibly be true, right? He wouldn't expect ANY municipality to go along with that, right?

http://m.freep.com/localnews/article...0312059&f=1232

[corktownyuppie]

http://m.freep.com/localnews/article?a=2012120312059&f=1232

First of all, does anyone find it ironic that the State is presenting this Consent Agreement on the 13th day of the month which happens to be 3/13 or 313, Detroit's area code?

Anywhooo ...ironic observations aside, IF what the TV media says is true, the Governor will not be offering any cash assistance to the City in the agreement. Why would this Mayor & City Council agree to that? That can't possibly be true, right? He wouldn't expect ANY municipality to go along with that, right?

Not sure that Detroit is in a position to be making demands here. The reason why a municipality would be motivated to take the consent agreement is because the alternatives -- EFM or municipal bankruptcy -- would mean losing all political controll.

[Dexlin]

From what I hear, this morning, the agreement, in essence, completely cuts the city council out -- the body that's been asking for bigger and more service cuts than the mayor, BTW -- and leaves the mayor and some kind of 9-member council-like body to do the cuts with the mayor, which just totally seems bizarre, to me. What it essentially does it make Bing the city's emergency manager with a kangaroo court to rubber stamp it.

Honestly, if that's the case, I say just put an actual emergency manager form of government in [[without Bing heading it up, of course) and do away with the theatrics. This sounds less like a consent agreement, and more like an emergency manager gussied up to look like a local democracy.

This was supposedly a draft, and with all of the rumors being reported as fact, this may not even be the case. I sure hope to hell it's not. lol

[gnome]

http://www.detroitmi.gov/CityCouncil...lSessions.aspx

not sure if this feed is live

[professorscott]

The Governor hasn't got a lot of options here. He has to very quickly get the City to agree to something, or he will have to put in an EFM. The Mayor's handling of the situation has not been effective; nobody is even close to a spending plan that matches up to reality.

[Danny]

The Detroit City Council giving in a consent agreement means that Gov. Snyder, The Nerd would have to propose on the partial financial team the would only Detroit Government's finances. Mayor Bing and City Council will stay in office only handling city business. City Unions will keep their pensions and some concessions would be given up. Pay will be cut for the Mayor, city council and most of its employees. At least it would keep the emergency manager away.

[corktownyuppie]

From what I hear, this morning, the agreement, in essence, completely cuts the city council out -- the body that's been asking for bigger and more service cuts than the mayor, BTW -- and leaves the mayor and some kind of 9-member council-like body to do the cuts with the mayor, which just totally seems bizarre, to me. What it essentially does it make Bing the city's emergency manager with a kangaroo court to rubber stamp it.

Honestly, if that's the case, I say just put an actual emergency manager form of government in [[without Bing heading it up, of course) and do away with the theatrics. This sounds less like a consent agreement, and more like an emergency manager gussied up to look like a local democracy.

This was supposedly a draft, and with all of the rumors being reported as fact, this may not even be the case. I sure hope to hell it's not. lol

It's funny to think that Bing stands to benefit from this. He's actually the one who was pissed off about the proposal, stating that it took much power away from the city.

http://www.detroitnews.com/article/2...xt|FRONTPAGE|p

The governor and Bing neared a deal after a productive meeting Friday afternoon, and Snyder hoped an announcement could be made Monday morning, when the pair was scheduled to appear jointly at the Pancakes and Politics breakfast. But the mayor wobbled Sunday night, apparently concerned about giving away too much of his power, and Snyder decided to shoot the puck. He called Bing before the breakfast, told him he was taking the deal to council, and the mayor decided to skip the breakfast program.

Whether anyone agrees or disagrees with the proposal, it's important to note that out of the 9 people on proposed financial advisory board, only 3 of them will be solely appointed by the governor's office. 3 more of them will be jointly chosen by the city [[albeit off of a list of approved appointees). And then 3 will be direct appointees of the city or council.

And, frankly, again...we can all avoid all of this if we just paid our bills. So for anyone that doesn't want this oversight, then propose an alternative.

Frankly, I think the problem isn't that certain people are in charge. I think the problem is that once you get there, you find that the political forces are just far too overwhelming, being pulled apart by 40+ unions, each needing to agree and ratify...plus layers and layers of inefficient governmental services.

[1953]

I think you hit it on the head, Corktown Yuppie. The city system is too big and integrated to make small changes work. Instead, someone needs the authority to blow up the system and start again.

[SteveJ]

Unfortunately it sucks but I really can't see this mayor and city council doing anything productive. Its been over a year and we really haven't seen any changes. The next 12 months are going to be very ugly for Detroit public employees.

[Novine]

What magic wand is this group of 9 supposed to waive that's going to address the cash crunch? Allowing the city to borrow more money only pushes the problem down the road for 6 months. What will happen in 6 months that's going to stop the bleeding?

[corktownyuppie]

What magic wand is this group of 9 supposed to waive that's going to address the cash crunch? Allowing the city to borrow more money only pushes the problem down the road for 6 months. What will happen in 6 months that's going to stop the bleeding?

I think the state will help them restructure debt, but they'll have to consolidate and eliminate entire [[and likely inefficiently structured or totally unnecessary) departments.

[SteveJ]

I was reading the free press and was reading the comments section and that guy peddling the DIA art was on there. This guy honestly doesn't give up.

[Novine]

"I think the state will help them restructure debt, but they'll have to consolidate and eliminate entire [[and likely inefficiently structured or totally unnecessary) departments.'

Have you ever looked at the city budget? Most of the departments that people talk about dumping don't amount to squat in savings. Most of the general fund dollars go to police and fire. Others have large dollars amounts attached to them but are funded with federal dollars. DDOT is considered an enterprise fund and who's going to take on that? Same with Public Lighting.

[Lowell]

What magic wand is this group of 9 supposed to waive that's going to address the cash crunch? Allowing the city to borrow more money only pushes the problem down the road for 6 months. What will happen in 6 months that's going to stop the bleeding?

Very good point. 'Waiving' the wand is a good choice of words. I think the goal is to kick the can beyond the elections. Mr. Snyder's party is already in trouble with blow back from their taxing pensions to anti-labor moves. Additionally Obama is ahead by 17 points and Stabenow by 22. The last thing they need is an angry and invigorated Detroit electorate and more ballot proposals.

[Zacha341]

Looks like it was good times relative to the er' 'agreement' yesterday:

Detroit Mayor Unhappy with State's Proposed Consent Agreement

Detroit Mayor Dave Bing and other city leaders say they don't like the consent agreement that has been handed down by Governor Rick Snyder. The mayor feels the agreement does not represent the spirit of partnership needed between the city and the state to resolve Detroit's financial challenges. In fact, the mayor feels the governor and his team are taking the power away from the people.
"I don't believe he's on board yet," said State Treasurer Andy Dillon.

Not only is Bing not on board, he seems downright disgusted, calling Snyder "disingenuous" in his recounting of a near deal after their meeting on Friday. Bing said after he and his team reviewed the consent agreement, he called the governor personally Monday morning to tell him the proposal is unacceptable because it does not leave elected officials in charge of the city.
Dillon said it is a work in progress.

"I told city council I would like to be before them early next week because what I don't want to do is get towards this March 26 date and have the governor not have time to look at a Plan B if we need a Plan B," he told reporters.

Read more:

http://www.myfoxdetroit.com/dpp/news/local/detroit-mayor-unhappy-with-state's-proposed-consent-agreement-20120313-ms

[Dexlin]

You know, for as much as I disliked Engler, he'd have had an emergency manager in there on Day One. I'm thoroughly unimpressed with how Snyder has handled this. The reaction from the council and mayor is both predictable and understandable. The governor is supposed to be the adult in the room given the reality that no council worth its salt, be it Detroit or any other city in the state, would sign itself to symbolic status, nor should any democratically-elected municipal government ever be asked to do such an insulting thing, no matter how much they've failed.

Everyone knew from the second Snyder sent in the review team that the state was taking over the city's finances; that was a given. Given that, and given that a legislative body would never support signing away its democratic rights, if even only on principle, why in the world did Snyder extend the review period, and why are we even discussing a consent agreement? Stop this craziness and install the EM, already.

Whether you agree with the EM act or not, no one can seriously sit here and say that Snyder handled this competently. This process has not only made me doubt the motivations of all the parties involved, but also their will and bravery for what will be needed after we get past this point, from the council all the way up to the governor. This has just been embarrassingly sloppy, and it makes you question if anyone is in charge, at all, and when the state is put in charge [[by proxy) whether it'll mean anything.

A process that could have been used to give the city residents hope has left me [[and I'm sure many others) feeling dispair.

BTW, that Andy Dillon is anywhere near a position of power, particularly in municipal affairs, after his stint in the state legislature is a damning indictment of how shallow our political bench is in this state. Michigan is being reinvented, all right...straight into the ground.

[corktownyuppie]

It's clear from their reactions Tuesday that most of the city's elected officials saw only their own little worlds collapsing under the governor's proposal. But as someone who lives in Detroit, I saw clearing, draining and a new foundation on which to build a future.
For the first time in a long time, I saw hope.

http://www.freep.com/article/2012031...ent-state-plan

That's how I feel about it too.

[corktownyuppie]

Like the 2009 government rescues of GM and Chrysler, the New York fiscal overhaul of the late 1970s -- on which Snyder's plan for Detroit is based -- was widely acclaimed as a success. Financier Felix Rohatyn led a high-powered team that recommended what became known as the Municipal Assistance Corp., overseen by then-Gov. Hugh Carey and ultimately credited with restoring solvency to the Big Apple.

Why, in the wake of successful turnarounds like those of New York and GM and Chrysler, would Detroit's leaders now spurn the lifeboat that is now being tossed their way by Snyder?

Bing would not be deposed as mayor, as the CEOs of GM and Chrysler were in their restructurings. Belle Isle would not be confiscated. Yes, there will be strong medicine to swallow, but Bing and council have known -- and said -- that for years.

Dillon said he and Snyder thought Bing was receptive to their plan during a meeting late Friday, but by Sunday, he had backed away. Dillon said he had a productive meeting Tuesday morning with eight of nine council members about the consent agreement. He said he believes two are prepared to vote yes, and that he wasn't hearing shouts of "Hell, no!" from the others, although they were noncommittal.

Here's hoping they all grab onto the lifeboat and join Snyder and Dillon in hammering out a rescue deal this week. If not, the options will get worse with time, and the citizens will suffer.

http://www.freep.com/article/2012031...ate-s-lifeboat

Forget about whose ideas are whose. So far, this is the first plan I've seen that provides for the much-needed financial and organizational re-structuring necessary to right-size city government.

Yes, right-size, I can't believe I'm saying that.

You know, I'm generally a moderate in the political spectrum with a bias toward fiscal conservatism in the broad picture. I've voted for Democrats in every election save 2. But getting invested in Detroit politics somehow has me taking the traditionally GOP positions any time I get into conversations about what really needs to happen.

What does that say about Detroit that an independent voter who's voted Democratic for most elections is taking what seem to be far right positions in Detroit politics?

Maybe it says that the existing systems are biased toward self-preservation at the expense of the greater good.

[cramerro]

Surprise, surprise... the first time the Council and Mayor agree on something, it is to oppose the consent agreement.

As someone who really wants the best for the City, it is upsetting to me to continue to hear soundbites and freep quotes and online posts that show how distorted the view of reality is for many in this region. This rediculous stance of 'oppose anything' from outside the City is FINALLY going to get those people exactly what they are asking for, and it ain't gonna be pretty. The City is out of cash. Period. NOW. The elected officials have failed, and failed, and still failed again to do anything about it other than pick the low-hanging fruit that should have been implemented 10 years ago. The officials have PROVEN that they cannot fix it themselves. How can we still be at the point, after four? five? six?? months of the state being hanging out at City Hall, with the Gary Brown calling for MORE cuts than the Mayor, for everyone publicly acknowledging that cash is running out in... 15 DAYS now... and we're still at square one. "We can fix this ourselves..." you've been given for six months+ the chance to come up with real ideas and put them in place... and all we have are some tentative labor agreements? It's over. Take the Consent Agreement and get this fixed!!!

[Bill07073]

This is a copy and paste from Crains regarding the terms of the consent agreement.

Consent agreement would give new board control of Detroit's finances

By Nancy Kaffer



A draft of a consent agreement that would expand the powers of Mayor Dave Bing and the Detroit City Council would leave the mayor in control and the council in place — but create a Financial Advisory Board to oversee the financial management and stability of the city, according to a copy of the draft agreement, obtained by Crain's.

The board would become the ultimate authority in Detroit.

Although the mayor still would create the city's budget, and the council still would approve the budget, final approval rests in the board's hands.

The agreement, which would be for three years, also says that if any city official publicly objects or fails to adhere to the agreement, the board immediately can recommend the appointment of an emergency manager.

The agreement would give the mayor and the city's COO the ability to impose expired union contracts 30 days after the adoption of the agreement along with the ability to sell city assets, with the approval of the Financial Advisory Board.

Under the agreement, the mayor and COO are freed from the "duty to bargain" with unions and thus could impose new contracts on unions whose contracts have expired 30 days after the adoption of the agreement, Dillon said. About 85 percent of the city's labor contracts are set to expire in June, the treasurer said.
The board would appoint the COO, who must be jointly recommended by the mayor and governor. If the mayor and governor can't agree on a candidate, the board can make the appointment.
Public comment at today's City Council session was uniformly negative on the topic. But many council members said they're open to an agreement. Council approval is required.
The City Council must approve the consent agreement before it can take effect. Dillon hopes to bring it before the council early next week.

If the consent agreement is approved, the state will help Detroit obtain $137 million, Dillon said. About $37 million will come from adjusting city debt; about $100 million will come from new loans.

The state will help the city get the new loans by arranging an "intercept" of funds, likely state revenue sharing, that will ensure debt payments are made. Dillon said the loans would cover the roughly $50 million in insurance claims the city pays each year, freeing cash for operations.

The city is expected to run out of cash in April. The annual budget is $3.1 billion; the general fund budget is $1.2 billion. At the end of the last fiscal year, the general fund deficit was roughly $200 million.

If the agreement is adopted, the city expects to undertake, with board oversight:
• Reducing the city workforce.
• Reducing city vendors.
• Outsourcing some city departments and functions.
• Making improvements in the Detroit Department of Transportation.
• Potential tax amnesties.
• Modifying city taxes.
• Enhancing city revenue collection.
• Making improvements to the city's real estate management practices.
• Reviewing collective bargaining agreements.
• Analyzing best practices for health care benefits and administration.
• Selling city assets.
• Carrying out the restructuring plan.

Full Article Here

[SteveJ]

I was watching the news last night and its obvious that the city council is just fighting to save their jobs. I just don't see an alternative to this mess. The mayor and council had all this time and they have come up with nothing but soundbites. The alternative of a state takeover would be that you will have thousands of workers not being paid in a month and have total anarchy. Unfortunately, the only solution I see is to downsize the city.

[Searay215]

Here is my personal opinion: Detroit is like a drug addict, doesn't want to get clean but wants the money to keep the habbit going. Let them go bankrupt.....like a drug addict, they will only get better when they have hit bottom or die.

[Novine]

"It's over. Take the Consent Agreement and get this fixed!!!"

I'm no fan of Bing and I think he's mostly mismanaged the past 2.5 years. But what exactly is it that you and Corktown Yuppie think can or should be done by this committee? The claims that nothing have been done are false. The city has been reducing its workforce. It offloaded its obligations for Cobo Hall to the Regional Authority. I don't know the details of the labor agreements but the Mayor has claimed that he's negotiated changes to the agreements that will save the city money. Those aren't low-hanging fruits. Those are structural changes that took and will take a lot of work to implement and may take years to result in appreciable financial savings. Those kinds of changes don't often result in savings overnight.

People keep banging the drum that the city must focus on core services. Great! I agree with that view. But the core services like Police and Fire are also the most expensive ones. Maintaining streets and running DDOT are big cost centers too. All of them can be run more efficiently and there are ways to save money in all those areas. But they are still going to cost money to run, money the city doesn't have due to declining tax base, cuts in state revenue sharing, and all the other problems afflicting the city. People have this fantasy world view that you can slash a bunch of other "non-core" services and that will provide the money to pay for the core services. But anyone who's looked at the budget knows that not the case. That's why a lot of people are long on rhetoric and short on details. It's easy to talk about crooks and corruption or focusing on "core services" without providing the details on how you pay for those.

Here's the reality check of what would be required to put Detroit on a "stable" financial footing:

- Massive layoffs of city employees. That means thousands of positions, primarily in Fire and Police. Those 2 departments account for 60% of the city's labor force paid for out of the general fund.
- Voiding all labor contracts. Cutting pay, health care and retirement benefits for all city employees including police and fire. Move all future employees to 401[[k) style retirement plans. Require all employees to contribute more towards pension and health care costs. Most city employees already have contribution levels on par with private sector employees.
- Eliminate or drastically cut health care for retirees from the city.
- Continue to cut back bus services to "sustainable" levels.
- Outsource or contract out assessing, finance, IT, legal and tax collection services to the county or state or private contractor.
- Eliminate or outsource all health care services to the county or state or to non-profit providers.
- Cut back recreation department significantly and raise fees for programs and facilities.
- Cut the budget and staff of the Mayor and City Council.
- Restructure all city debts.

Implementing these kinds of changes will over the long-term could allow the city to become financial stable. What is unknown is how the resulting cuts in city services will impact residents and businesses and whether those negative impacts will result in more people and businesses leaving the city. Those who live in Detroit know that things have gotten very bad. They can get worse. As seen elsewhere in the world, austerity measures often lead to a vicious downward cycle.

[drjeff]

At this point the only way to make the city work is to essentially blow it all up and start over from scratch in terms of government and services. The sitting government is not willing to do that, so the state will have to. I'm not sure whether whoever ends up in charge will actually improve conditions or not, but the current city government has done absolutely nothing other than try to save their own asses.

[corktownyuppie]

"It's over. Take the Consent Agreement and get this fixed!!!"

I'm no fan of Bing and I think he's mostly mismanaged the past 2.5 years. But what exactly is it that you and Corktown Yuppie think can or should be done by this committee? The claims that nothing have been done are false. The city has been reducing its workforce. It offloaded its obligations for Cobo Hall to the Regional Authority. I don't know the details of the labor agreements but the Mayor has claimed that he's negotiated changes to the agreements that will save the city money. Those aren't low-hanging fruits. Those are structural changes that took and will take a lot of work to implement and may take years to result in appreciable financial savings. Those kinds of changes don't often result in savings overnight.

People keep banging the drum that the city must focus on core services. Great! I agree with that view. But the core services like Police and Fire are also the most expensive ones. Maintaining streets and running DDOT are big cost centers too. All of them can be run more efficiently and there are ways to save money in all those areas. But they are still going to cost money to run, money the city doesn't have due to declining tax base, cuts in state revenue sharing, and all the other problems afflicting the city. People have this fantasy world view that you can slash a bunch of other "non-core" services and that will provide the money to pay for the core services. But anyone who's looked at the budget knows that not the case. That's why a lot of people are long on rhetoric and short on details. It's easy to talk about crooks and corruption or focusing on "core services" without providing the details on how you pay for those.

Here's the reality check of what would be required to put Detroit on a "stable" financial footing:

- Massive layoffs of city employees. That means thousands of positions, primarily in Fire and Police. Those 2 departments account for 60% of the city's labor force paid for out of the general fund.
- Voiding all labor contracts. Cutting pay, health care and retirement benefits for all city employees including police and fire. Move all future employees to 401[[k) style retirement plans. Require all employees to contribute more towards pension and health care costs. Most city employees already have contribution levels on par with private sector employees.
- Eliminate or drastically cut health care for retirees from the city.
- Continue to cut back bus services to "sustainable" levels.
- Outsource or contract out assessing, finance, IT, legal and tax collection services to the county or state or private contractor.
- Eliminate or outsource all health care services to the county or state or to non-profit providers.
- Cut back recreation department significantly and raise fees for programs and facilities.
- Cut the budget and staff of the Mayor and City Council.
- Restructure all city debts.

Implementing these kinds of changes will over the long-term could allow the city to become financial stable. What is unknown is how the resulting cuts in city services will impact residents and businesses and whether those negative impacts will result in more people and businesses leaving the city. Those who live in Detroit know that things have gotten very bad. They can get worse. As seen elsewhere in the world, austerity measures often lead to a vicious downward cycle.

I think your analysis is sound and that the financial advisory board will do these things....but...

I wouldn't rule out the possibility that either police or fire or both are enhanced by combining them with them at the county or state level, similarly to what was done with Pontiac. This means that cost to effectively provide coverage will be spread at the county or state level while also shedding costly and unnecessary layers of bureaucracy. I also consider the possibility that such arrangements might not be done at 100%, but perhaps in certain jurisdictions.

Yes, I think health care benefits for retirees will be cut for everyone. Either by requiring higher deductibles, increasing premiums, or both.

Yes, I agree that what was done with Cobo Hall was a success. Now we need to do that with Belle Isle, buses, lighting, city airport, etc.

I think that Detroiters will suffer from cuts in city services. This will disproportionately affect those who rely on city services. Other areas of Detroit, where businesses and citizens are generally accustomed to providing their own services and security, will suffer less.

I wonder, but am not sure, if one can increase revenues by lowering the tax rate but changing collection mechanism to ensure 99% compliance. Same with property taxes. [[When one of our own city council members paid under $100 in property taxes and saw nothing wrong with this...that's a sign that we have problems.

I think quality of life for many Detroiters will become worse. I think quality of life for some Detroiters will become better. And I think that destroying the current governmental system will allow us to rebuild it in away that's actually sustainable.

We're not the first city to flirt with bankrupcty. NYC, which I realizes is not the same as Detroit, was able to emerge from a bankruptcy scare in the early 1980s. Many of the things they did will work here. Some won't. What we're doing right now definitely won't.

Lastly, the state will be able to do things that will be good for Detroit in the long run but bad in the short run. It's politically impossible for anyone in the current system to do that.

Will Detroit shrink to 250,000-500,000 before it emerges as a sustainable city? Very possibly. But at least then we'll be on firm ground and ready to build.