Council OKs deal to save 2,000 jobs, $80 Million

[Allan]

Detroit council OKs a deal to save 2,000 jobs, $80 million

February 5, 2005

BY MARISOL BELLO

FREE PRESS STAFF WRITER

It took more than six attempts over three months, two failed votes, two special sessions, a threat to have police gather up errant members and finally a four-hour visit from the mayor.

But on Friday, the Detroit City Council unanimously approved a pension bond deal that avoided 2,000 layoffs and saved the city $80 million this year.

The 8-0 vote came at the end of a marathon session in which Mayor Kwame Kilpatrick told the council that unless it approved the deal, the city would have no choice but to start sending out pink slips next week.

After the vote, a relieved mayor said Friday's session was just the beginning of what he expects will be more visits to the council table and more wrangling with its members as the elected leaders grapple with a withering fiscal crisis that threatens to send the city into receivership.

"This issue saved jobs," Kilpatrick said. "All the angst and frustration and fear that workers have been feeling over the past few days and weeks, well, they can rest now. They know the picture, at least moving forward into the next budget year. And I'm happy about that."

The plan allows the city to borrow $1.2 billion to fully fund its retiree pensions, a debt it is currently paying at an 8-percent interest rate. Now, the city will be able to refinance the debt at a rate that is 2 percent lower.

As a result, the city saves $80 million this year, but over the 14-year life of the bond, administration officials say the city would save $277 million.

The measure passed after Council President Maryann Mahaffey and her allies, Sharon McPhail, Barbara-Rose Collins and JoAnn Watson, ended their opposition. The four had voted the deal down on Wednesday, calling it too risky for the city.

But on Friday, after Kilpatrick painted a stark picture of the devastating impact of so many layoffs on the city, the four -- led in their negotiations by Watson -- proposed to vote for the measure in exchange for promises that the mayor would not lay off any more workers this year, other than the 700 he previously announced, and institute a freeze on the purchase of real estate and nonessential items.

The compromise did not extract anything new because the mayor already had announced that the 700 layoffs would be it for this year.

Meanwhile, his administration has been saying for several months that it is freezing all nonessential services and contracts.

The four members had tried to push the mayor to agree not to make job cuts in the next fiscal year, which begins July 1. But Kilpatrick said that with the city facing a projected $231-million shortfall for 2005-06, he had a fiduciary responsibility to eliminate it, which likely would mean more job cuts.

McPhail, a mayoral candidate and Kilpatrick critic who led the opposition against the bonds, said Friday that she still finds the transaction a gamble. But she said that at least she and her allies ensured a promise from the mayor to leave workers alone for the rest of the year.

"We felt we had to have those commitments from him," she said. "The council stepped up today to force the issue."

Her opposition has been rooted in a distrust of the mayor, who she said is wasting public dollars on unnecessary contracts and other purchases.

But her colleagues who supported the measure questioned what they called the political gamesmanship that led to several tense moments among McPhail, Kilpatrick and other council members.

"Residents, employees and their families scored a victory today, but the process and gamesmanship of some council members has made it an ugly victory that does not speak well for the entire Detroit City Council," said councilwoman Alberta Tinsley-Talabi. "The proposal passed today does not differ at all from the one voted down two days ago. It was the right thing to do then, as it was today."

Tinsley-Talabi, Alonzo Bates, Kenneth Cockrel, Jr. and Sheila Cockrel approved the bond deal again on Friday.

Sheila Cockrel called the move by the other four members "a face-saving measure" because the mayor already had pledged no more layoffs this year and a restriction on purchases.

Union officials on Friday said the council made the right move.

"The alternatives did not stack up very high," said Al Garrett, president of AFSCME Council 25. The union represents about 3,500 of the city's 18,000 city employees. "From our view, we think this is a much more favorable solution."

Meanwhile, AFSCME Local 207 President John Riehl, a frequent critic of the administration who opposed the deal, was uncharacteristically without comment afterward.

It was touch and go all day whether the bond deal would pass. Watson's office even issued a news release in the morning that said she was voting against it: "If the mayor follows through on his threat to lay off 2,000 employees, their pink slips are on his head, not the council's," the release said.

By the afternoon, she was working feverishly for a compromise.

"The fact is that the legislative body and the executive body must work together," Watson said.

Contact MARISOL BELLO at 313-222-6678 or [email protected]. Staff writer M.L. Elrick contributed to this report.