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Wed February 22, 2012
Detroit Council seeks more details on union agreements
Members of the Detroit City Council want more answers about how the city will avoid running out of cash.
Mayor Dave Bing hammered out tentative agreements with most city employee unions, including police and firefighters. They worked as a state review team continues to pore over Detroit's finances, as part of the process that could lead to the state appointing an emergency manager for the city.
These agreements are at the heart of Bing’s plans cut costs. They must still be ratified by union members.
But Irvin Corley, Jr., the Council's fiscal analyst, says there are still lots of questions about how the agreements would save money--and whether those savings could be realized quickly enough for the city to avoid running out of cash.
"The material reviewed thus far--basically only the tentative agreements--do not provide the necessary information to allow a decision on whether the agreements address the short term cash flow, and longer term structural problems adequately to allow the city to operate with a balanced budget going forward," Corley wrote.
"So far, unfortunately, the level of savings being achieved under the tentative agreements does not seem substantial enough to appropriately address the city's fiscal cash crisis."
A report issued late last year warned the city could run out of cash by April, and end the fiscal year in June with a $45 million shortfall.
However, Bing administration officials say their plans should save the city $100 million by the end of the fiscal year, and Bing has assured Council the city won't run out of cash.
Council members are still concerned, though. Council President Pro-Tem Gary Brown says the city needs cash on hand to make sure it can pay bills, and even more savings if there's a projected deficit. And he doesn't think the savings from the tentative agreements add up.
“So what is the plan in order to get us through the rest of this year and be able to make payroll and pay our bills?” Brown asked.
According to the city's 2011 Comprehensive Annual Financial Report, Detroit's deficit increased by about $40 million from the previous year, totaling almost $200 million.
And for the first time ever, Corley said, the city's assets exceeded its liabilities. He estimated the city's current net worth at $-29 million.
"The checkbook is overdrawn," Corley said.