Detroit Mayor: Workers Need to 'Share the Pain' to Avoid City Bankruptcy

Friday, 30 Nov 2012 11:15 AM

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With the city of Detroit on the verge of insolvency for the second time this year, Detroit Mayor Dave Bing said workers who feel entitled to their jobs need to understand that saving the city will require them all to share the pain.

In an interview with CNN, the former NBA player said the combination of years of budget deficits and Detroit losing about a quarter of its residents has been a one-two punch that require him to make some hard choices.

“We are in an environment, I think, of entitlement, we’ve got a lot of people who are city workers, who for years and years, 20, 30 years, think they are entitled to a job and all that comes with it,” Bing said, adding that “nobody wants to go backwards, but in order for us to move this city forward we’re going to have to take a step or two backwards — and then, I think, all of us have to participate in the pain that’s upon us right now.”

The city plans to put most of its employees on furlough starting Jan. 1 to deal the rest of its $30 million budget deficit, a shortfall that was supposed to be picked up by the state, reported the Detroit Free Press. That money is now in flux because the city didn’t approve a contract at the beginning of the month.

The contract was denied as part of a power struggle between Bing, members of the council, and the state, which has been trying to help Detroit get back on its feet.

With an $8 billion debt from years of budget deficits that ran in the tens of millions until this year when it hit $100 million, Detroit can’t afford to borrow more money.

Over the course of the last decade, Bing told CNN, the city’s population has dropped from more than a million to barely more than 700,000. The loss of residents has meant a significant drop in revenue to city coffers, and because those people are spread across 139 square miles — a large area for that small a number of people — it has put strain on city services, raising their cost as well.

"Chapter 9 bankruptcy is a last resort," Bing said Thursday. "We expect to successfully meet our financial challenges outside of bankruptcy. Detroit will remain solvent."

State legislators are not so sure, with several suggesting the city consider going into bankruptcy to make it easier to restructure its finances and one going so far as to suggest dissolving the city entirely as a way to clear the bad debt and let it start over.

State Sen. Rick Jones told WWJ-TV in Lansing that the city should consider dissolving itself and merging with the nearby Wayne County government as a last option to protect the city from dying as it goes broke and then being ripped apart in bankruptcy.

“We really have to look at everything that is on the table,” Jones said. “Again, if this goes to federal bankruptcy, every employee down there will suffer, the city will suffer and the vultures will come in and take the jewels of Detroit and they will be gone.”

If city and state officials, as well as Bing, can’t start working together and Detroit does file bankruptcy, it would be the largest American city in history to do so.

“[Bankruptcy] would be unfortunate and unlikely for it to happen only because of the impact of it doing so and the impact that it would have on the state and the surrounding areas,” said former city communications director Karen Dumas, who served under Bing as well as former Mayor Kwame Kilpatrick.

“On the other hand, it would also erase some of the legacy costs and debt that the city has been burdened by because people are unwilling to recognize the damage those things have caused.

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