As the 2008 presidential campaign’s rhetoric of hope and change wound down, another election began in a city with very little hope and in great need of change. The incompetent and corrupt Detroit Mayor Kwame Kilpatrick was preparing to resign, the city’s finances were a mess and residents were leaving the city at an unprecedented rate.
Detroit Mayor David Bing’s election in 2009 brought with it prospects of a turn-around in Detroit, but his term has so far been a disappointment, and Bing’s divisive rhetoric is not helping the city.
Many saw Bing’s election as a fresh start, since the former Pistons basketball star seemed to genuinely care about Detroit. As other firms were leaving Detroit, Bing founded Bing Steel in 1980. At the time of his election, Bing Steel had become the Bing Group, an apparently successful auto supplier, based in Detroit’s North End Neighborhood.
While this entrepreneurial experience suggested that Bing was well poised to take bold action, Bing had actually left his former company’s finances a mess. Shortly after he was sworn in as mayor, the Bing Group laid off its workers and was sold.
Bing’s company’s failure foreshadowed his term as mayor. He and the Detroit City Council have still not enacted real changes to put the city’s finances on solid footing.
For example, one of Bing’s biggest proposals is the Detroit Works project. This program is supposed to relocate residents and consolidate city services to viable parts of Detroit, but, after three years, no major action has been taken.
Even the city’s bookkeeping has not improved. In January, Detroit canceled several neighborhood improvement programs after federal officials found that the city didn’t have $53 million to spend on housing and development, but rather a $53 million debt.
Without bold action, Detroit will run out of money this spring. Since a Detroit bankruptcy would affect Michigan’s credit rating, Republican Gov. Rick Snyder assembled a financial review team that, over the past several months, has advised Detroit’s government regarding its finances. It has confirmed that the main driver of Detroit’s deficits is union contracts that the city cannot afford.
Employee benefits eat up half of the city’s general fund. Health care costs have risen by more than 60 percent since 2008, and the city has a $5-billion liability for retiree health benefits. This results in the city using a larger proportion of its budget each year for retirees who no longer provide services to the city. While Bing and the City Council have enacted small cuts by laying off some workers, without union concessions for these rising legacy costs, Detroit cannot balance its budget. Detroit could lay off every one of its employees and still have a budget problem.
This is why last week, Snyder proposed a consent agreement, which would put a committee in charge of Detroit’s finances. The committee would work as an emergency financial manager and oversee the restructuring of Detroit’s finances and operations. As I’ve written in a previous column, emergency financial managers have the power to amend union contracts to fix Detroit’s legacy costs. While this committee would not be elected, the alternative is bankruptcy, where a judge — also not elected — would fix Detroit’s finances.
Bing was not happy with Snyder’s proposal, calling the governor a “liar” and “disingenuous.” This rhetoric does not help Detroit, but Bing is up for re-election next year, and blaming Detroit’s problems on outsiders may be his attempt to pander voters.
Name calling shouldn’t impress voters, but working with the governor to fix Detroit’s finances will give Bing a record on which to base his re-election.
Bing has said, “I won’t work for the governor. I won’t work for that financial team of nine people. I work for the people of the city of Detroit because they voted me in to do this.”
He’s right, but Bing was elected three years ago, and Detroit expects progress.