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Detroit's Financial Crisis

One hurdle to creating a more vibrant Detroit is funding for vibrancy-related efforts. The city expects 2,000+ jobs (31% of the city's general workforce) to get cut, with a raise in taxes and additional cuts to cultural programs.

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Below is an article from the Detroit Free Press about the city's ongoing financial struggles.  Highlights include a tax increase, a layoff of 31% of the workforce, and cuts to the zoo, museums, and (ironically) the economic growth group.


From increasing income taxes to laying off more than 500 police officers and firefighters, the Detroit City Council rolled out an ambitious -- and painful -- plan Monday that it hopes will save the city from insolvency and an emergency manager.

The plan calls for increasing income taxes for residents from 2.5% to 3% and nonresidents from 1.25% to 1.5%.

Besides the income tax hike, the proposals include:

• Sharing health department services with a hospital or Wayne County.

• Cutting up to 2,300 workers.

• Eliminating subsidies to the Detroit Zoo, Detroit Economic Growth Corp., Eastern Market, the Detroit Institute of Arts and the Charles H. Wright Museum of African American History.

• Demanding the Detroit Public Schools pay its $15-million electricity bill to the city.

The rescue plan is a last-ditch effort to avoid an emergency manager as the city faces the prospect of running out of cash by April to deliver basic services and meet payroll.

The council is to reconvene at 2 p.m. today to debate the proposals, which would be added to Mayor Dave Bing's plan to layoff 1,000 workers.

"We need immediate savings to avoid a financial crisis," Councilman Ken Cockrel Jr. said. "A thousand layoffs, frankly, isn't going to be enough."

500 police, fire jobs to be cut in Detroit City Council's plans

There's one certainty as the Detroit City Council races to stave off an emergency manager: No service or tax is sacred.

After unveiling sweeping proposals to save more than $150 million a year, council members pledged to make painful and unpopular cuts to save the city from insolvency.

"Time is not on our side," council President Pro Tem Gary Brown said. "It's not fair, but if we sit here and try to be fair, we will never get to the place we need to get."

Among the most unpopular proposals is increasing the income tax of residents from 2.5% to 3% and nonresidents from 1.25% to 1.5% to raise about $50 million. But it's anything but certain because the state needs to support the increase, which council members concede may be a long shot.

Also at stake is public safety as the council considers laying off more than 500 firefighters and police officers. Under one plan, desk officers would be replaced by lower-paid civilians.

Mayor Dave Bing's office cautioned against such a move.

"Public safety is the most important service the city provides," mayoral spokesman Dan Lijana said. "Taking steps to ensure that public safety departments will not be decimated by layoffs include reforming pension and medical benefits citywide, work rule changes and a 10% pay reduction for those not already taking the cut."

The council joined Bing in demanding that police and firefighters take 10% pay cuts, which other employees accepted in 2009.

But Detroit Police Officers Association President Marty Bandemer said officers would not accept a pay reduction, calling it an "unreasonable additional sacrifice."

The centerpiece of Bing's rescue plan is union concessions, which would account for more than $100 million in annual savings. Without concessions, he argues, the state will appoint an emergency manager to unilaterally gut union contracts.

But council members said they can make the reductions without concessions.

"We have to be realistic and assume we aren't going to get any concessions," Councilman Ken Cockrel Jr. said. "I think we are going to have to lay off 2,300 employees, knowing that sounds horrible. I just don't see any other way."

The city has 11,000 workers, but only 7,300 are paid from the general fund budget, which the council is trying to cut.

Of those 7,300, nearly 4,000 come from the police and fire departments.

Council members said Bing's plan to lay off 1,000 workers -- at a savings of about $14 million -- falls far short of the kinds of cuts needed to save the city from insolvency.

Council members urged the mayor to consider their proposals, saying cooperation is essential to avoid an emergency manager.

"Let's stand together and work with the mayor," Councilwoman JoAnn Watson said. "The citizens have to see us working together."

The council is to resume discussions of the budget cuts at 2 p.m.

"As elected officials, we have to think like an emergency manager thinks," Councilman Andre Spivey said.

Also under consideration is selling the busing system, which costs the city about $85 million. Many regular riders complained for months that the buses are too often late, or don't show up at all.

"Detroit residents don't care who operates the buses, as long as they are safe, clean and on time," council President Charles Pugh said.

Council members plan to find a private operator or seek a regional authority with SMART, the transit system that serves Wayne, Oakland and Macomb counties.

Also being proposed is the elimination of subsidies to Eastern Market, the Detroit Economic Growth Corp., the Detroit Zoo, the Detroit Institute of Arts and the Charles H. Wright Museum of African American History. The projected savings:$5 million.

Council members also want to share health department services with a hospital or Wayne County at a savings of $6 million.

"We all know cuts alone won't solve the problem," Brown said. "This has to be a comprehensive strategy that involves reform."

Contact Steve Neavling: 313-222-8655 or


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