Mayor will trim his pay

[Allan]

TOM WALSH: Mayor will trim his pay; that's a start

Detroit is shrinking while the nation grows

January 6, 2005

BY TOM WALSH

FREE PRESS COLUMNIST

Detroit Mayor Kwame Kilpatrick will cut his $176,176 salary and those of some top appointees as he launches a cost-reduction campaign to avert a looming $214-million budget deficit.

"We can't ask others to make sacrifices if we don't start at the top," Kilpatrick said in an interview Wednesday. "I, my appointees, city contractors, everybody's got to take a little bit of the pain."

Kilpatrick wasn't specific about how large his pay cut will be or how many top city managers will be affected.

"We will start making some announcements and meeting with our unions next week," he said of the cost-cutting effort.

Kilpatrick and Sean Werdlow, the city's chief financial officer, wrapped up a sobering two-day forum Wednesday on the city's fiscal challenges. National economists, employee union officials and Detroit area business leaders joined in the blunt discussion of the city's predicament.

After the forum, Werdlow said he concluded that Detroit simply cannot ask its overtaxed citizenry for more money.

To eliminate the projected deficit in the $1.4-billion budget for the fiscal year starting July 1, Werdlow said, "the majority of adjustments will have to take place on the expenditure side."

Kilpatrick's decision to take a salary cut isn't an original idea: Michigan Gov. Jennifer Granholm and Lt. Gov. John Cherry have cut their pay 5 percent this year for similar reasons.

But it is a necessary first step if Kilpatrick hopes to enlist employee unions and the City Council in a collaborative effort to cut costs and deliver city services more efficiently.

History tells us that Detroit's public servants do not have a track record of frugality.

Look at the decade before Kilpatrick took office, for example.

From 1992-2001, Detroit lost 6 percent of its population. But during the same period, the number of city employees grew by 17 percent.

General spending by city government grew by 22 percent during that time. That meant the amount of spending per resident grew by 29 percent, according to data crunched for the Detroit economic forum by Robert Wassmer, a professor at California State University and an expert on economic development and tax policy.

Such a spending trend is lunacy, unless one believes that Detroit should beef up its payroll and services to prepare for an impending population explosion here.

No sane person expects such a population explosion, of course.

The Southeast Michigan Council of Governments predicts Detroit's population will shrink from around 950,000 in the 2000 census to 866,000 by 2030.

And why wouldn't it?

General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group reported Tuesday that their collective share of U.S. car and truck sales had sunk to the lowest level in at least 60 years. All three companies have been eliminating jobs.

David Sowerby, portfolio manager for Loomis, Sayles & Co., says he can't recall a greater disconnect in the past 30 years between the fortunes of the nation's economy, which is growing smartly, and Detroit's economy, which is not.

Dick Wade, president of Bank One's Michigan operations, said at the two-day forum that Detroit must act immediately to avert its budget crisis.

"Is Detroit a place where people and businesses want to be? If not, we're in a death spiral," Wade said.

"We're competing with cities that have lower property taxes, no income tax and no utility taxes. What's to halt the continued runoff of population?" he asked.

Getting Detroit's fiscal house in order is an essential step toward convincing more companies to locate and create jobs here.

And Kilpatrick's proposed pay cut, while largely symbolic, is a necessary step to begin the journey toward fiscal sanity.

The heavy lifting is yet to come.

Contact TOM WALSH at 313-223-4430 or [email protected].

[PghUSA]

I applaud that, Pittsburgh (as well as Eire, Buffalo and Philly) have had some serious financial issues the last few years but Mayor Murphy never once made that commitment (I like Murphy but he should share the burden). To be fair though Councilman Hertzberg has been shown all over TV here taking his pay checks back to City Hall's finance office and saying he can't take that with the City laying off hundreds and cutting pensions.

The one captain of industry that I always admired was Lee Iacoca for stating that when Chrysler was suffereing in the late 1970s he would take no pay until the company turned a profit. NOW THAT IS LEADERSHIP!

[Allan]

It's a start, but the city has a long road ahead. The city is expected to loose 50,000 residents over the next five years. The infrastructure in the city is nearing 75 years old or more, and needs to be replaced. Finally, the city government is twice the size it should be for a city of Detroit's size.

[Allan]

Friday, January 7, 2005

Could Detroit's money problems be too big for its leaders to fix?

By Daniel Howes / The Detroit News

Do you think folks will remember all the positive things they said this week about working together to solve Detroit's fiscal crisis when budget talks get down to choosing between the pain of cutbacks and the agony of bankruptcy?

Does Mayor Kwame Kilpatrick's self-imposed pay cut -- whatever it may be -- stand as anything more than a symbolic act that will do virtually nothing to elicit union concessions or close a budget shortfall approaching $230 million for the coming year and probably more in the future?

Do those who pay attention to the scandals that have roiled the Kilpatrick administration since the day it took office and the embarrassing antics of some City Council members really think the city's elected leadership has the mettle to manage Detroit's way out of this crisis?

The answer to each question -- if history and the mail I've received this week are any indication -- is "No," which is the saddest commentary on Kilpatrick's Detroit Economic Forum. About the only thing bleaker than the city's financial outlook is a belief that its leadership has the stomach or the smarts to fix it.

The crisis facing Detroit and its schools isn't just financial. It's one of low expectations, complicated by a demonstrated inability to shed the antiquated Rust Belt-era ways that enshrine incompetence and sprawling bureaucracy at the expense of garden-variety efficiency.

It's the conviction in large swaths of the suburbs and among a fair chunk of weary Detroiters that the city's problems are too large and its leaders are too small, in all that word implies, to face the reality of what Detroit has become and then set a course to correct it. Finally, it's the fatalism that says Detroit should just declare bankruptcy or something like it, let the state appoint a board to run the place and move on.

Not so fast.

The more I think about it and the more people I talk to, the more persuaded I am that a Detroit implosion like the one fatalists predict, perhaps accurately, would be bad for everyone. Detroiters would surrender a measure of their sovereignty to outsiders, which doesn't sit well south of Eight Mile (witness the state takeover of the schools in '99). And investment would stop.

The suburbs -- that is, the "Detroit suburbs" -- would be tarnished by the ignominy just when shoots of new civic life (stadiums, a cultural renaissance, Campus Martius, GM's Renaissance Center headquarters and new housing) are sprouting. To the outside world, Detroit's woes don't make 900,000 people look bad - they make 4.5 million look bad.

The most sobering part about the coming meltdown is that so many constituencies likely to be affected by it can do almost nothing to stop it.

Suburbanites don't vote in Detroit, even if those who work there pay taxes. And Big Business has enough chronic problems to limit its options beyond lending moral support to City Hall's efforts.

Right now, this downward spiral is controlled less by bond rating agencies, the governor and the Legislature and more by Detroit's politicians and their unions. With control comes responsibility for the success or failure that we'll all live with.

Daniel Howes' column appears Sundays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or at [email protected]. Catch him Fridays with Paul W. Smith on NewsTalk 760-WJR.

[baldy]

To the outside world, Detroit's woes don't make 900,000 people look bad - they make 4.5 million look bad.

I think that says it best. We really need to work together as a region in order to succeed. I only wish people like LBP could get that.

There have been a lot of things that have caused people to lose faith in the city of Detroit, but if KK gets re-elected, that might be the final straw for me.

[Allan]

The problem is that nobody wants to work together as a region. Look what the suburbs are doing right now....

They don't want to pay for the Cobo expansion, and now they want to spend millions of dollars to create their own water system, even though Detroit provides them with water cheaper than most other cities in the country!