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Detroit Mayor, City Council issue proposals to keep city solvent

Both Detroit Mayor Dave Bing and the Detroit City Council have put forth proposals aimed at avoiding a state financial takeover.

A recent cash flow report suggests the city is likely to run out of cash by spring, and be $45 million in the red by the end of June 2012.

Bing, who announced 1000 city layoffs last week, issued more details of his proposalTuesday. They include, in addition to the layoffs:

  • Replacing current furlough days with a 10% wage cut for all city employees.
  • Cutting medical and pension benefits for current employees and retirees;
  • Outsourcing management of the Detroit Department of Transportation.

Bing's office suggests their whole proposal will save the city $102 million for the remainder of this fiscal year, and $258 million the next.
The City Council is skeptical of Bing's plan. They suggest it has too many pie-in-the-sky elements, like expecting full union concessions (ongoing negotiations between the Mayor and city unions have gone nowhere).

The Council suggests deeper cuts will be needed to avoid a state takeover. Their fiscal analyst drafted  a savings plan outlining various scenarios that would allow the city to avoid that fate.

Council members have embraced the so-called "Scenario 2" as the most feasible option, because it foregoes the idea of union concessions and lays off 2300 employees. That would net the city an estimated $61 million this year.

However, there's virtually nothing the Council can do besides make suggestions. The Mayor is the only one with the authority to implement short-term cuts.

There's one thing the Mayor and the City Council do agree on: that the city should keep pressing for $220 million the state owes the city from a never-enforced 1998 revenue-sharing agreement.

Leaders in Lansing have basically denied Detroit's request for that money.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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