Payne: Bing’s longest season

Posted by hpayne on March 11, 2012

Mayor Dave Bing is a gentleman. He was a heckuva ball player. But watching him coach Detroit is like watching the 2012 Detroit Pistons. He knows what’s wrong, but he doesn’t have the horses to prevent a loss.

And 2012 is gonna be a heckuva bad season.

Nearly three months ago, Treasurer Andy Dillon issued a preliminary state review of city finances detailing a bleak picture of a metropolis heading for April insolvency. With long-term debt at $12 billion, the city was paying out $597 million in debt payments. That is, more than its Big 3 revenue fund generators – income taxes, property taxes, and casinos – combined ($538 million).

If the mayor and City Council didn’t get together, said the governor, the state would send in an emergency manager. Nothing happened. City Councilman Gary Brown said in late January that the city needed an immediate consent agreement. Nothing happened. In early February, Mayor Bing said he had a tentative agreement from unions for $100 million in cuts. No more details (and no plan to address long term liabilities).

The governor says he is waiting for Detroit to act. Today, Mayor Bing said he is waiting for Governor Snyder to act. Snyder says he needs a city budget plan to avoid an EM. Bing says he can’t negotiate specifics with unions if they know there’s going to be an EM who would discard their agreement.

So the city slowly sinks.

One thing is clear: Bing and the City Council don’t talk. Snyder may want a mayor-Council agreement, but Bing is contemptuous of Council. “(Ken) Cockerel has been there 15 years doing budgets, and they say I don’t know what I’m doing?” spat Bing at suggestions that Council has a budget plan.

So we wait for the governor. And if Council doesn’t like his consent agreement? Bing says they will have to take it or face an EM. “We can find jobs elsewhere,” said Bing of his staff. “I’m not so sure about (Council). They need the job.”

Van Conway, a Michigan turnaround expert who has helped reorganize municipalities and school districts, told the Freep the city’s condition is so dire only an EM can address its problems. That’s how Detroit automakers did it – Washington fired the CEO, took the company into managed bankruptcy, tore up union contracts, jettisoned assets, and put the company on a sustainable course. When asked if that was reassuring, Bing scoffed at the analogy. GM got billions in a federal bailout, he said, and though the automaker’s pension liabilities were large, they were not Detroit’s staggering 33:1 debt-asset ratio. By contrast, Grand Rapids debt-to asset ratio is just 39 cents to each dollar.

For all his protests against an EM, it looks like (as my colleague Dan Calabrese has pointed out in this space) that’s what Bing really wants. He needs Snyder to make the moves.

Pontiac emergency manager Louis Schimmel says a consent agreement for Detroit is a must. Bing agrees. Pontiac reached a consent agreement with the state – but didn’t live up to its terms. The city got an EM in 2009.

Tagged with:

Leave a Reply