With Detroit drowning in debt, is an EM the answer? - New York News

With Detroit drowning in debt, is an emergency manager the answer?

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By Charlie LeDuff
Fox 2 News


DETROIT (WJBK) --  There is a lot of talk about an emergency manager coming to Detroit and replacing the mayor, so we got in touch with Joe Harris, the emergency manager in Benton Harbor and the former auditor general of Detroit.  What does he think about the city, its finances and its mayor?

"When they asked mayor wannabe Bing how [are] you going to fix this, he [said] we're going to bring in our team of experts and they are going to develop a plan to help us get out of this.  There was only one thing missing from the team of experts -- expertise.  They didn't know what the hell they were doing."

Now Dave Bing didn't create Detroit's money problems.  He only added to it.

Detroit, here is the brass tacks of your finances.  Over the next two decades or so, we will have to pay back $20 billion in debt.  That doesn't include the $500 million deficit we're expected to run up this year alone.

So what's that mean?  It means Detroit spends as much as half its money to pay its credit card.  Another 40 percent goes just to pay cops, fire and other city workers.  What's left over?  About nine cents to pay for toilet paper and tires and heat.  You can't fix the city with that!

So how did things get this way?  Simple.  White flight, black flight, business flight, falling property taxes, poor government and public corruption.  There's nothing left in Detroit except unpaid bills, and now the state is reviewing the books for the second time in a year and they're talking about an emergency manager.

Sadly people talk about race and colonialism when it's really about somebody making sense of the dollars and cents.

"The state has a responsibility to protect the health, safety and welfare of its residents regardless of where they live or regardless of what school district they go to," said Treasury spokesman Terry Stanton.

Now the findings of the state financial review team are due at the end of February, but they could come any day now, and when they do, one of three things will happen.  Nothing, which is unlikely.  Two, we could get a new, tougher consent agreement, but you know how the last one worked out.  Or, three, Detroit could have an emergency financial manager appointed, who has limited power over the budget and contracts.  But under new state law, the emergency financial manager will become the emergency manager on March 27, and the emergency manager has king-like powers to kill union negotiated contracts, he could slash pensions, he could renegotiate the debt, he could sell the water department, or get this, he can get rid of the mayor and city council.

"I believe you need an EM, and you need it because you need a non-politician who understands business, how to turn a business around," Harris said.

But it's a city, not a business.

"It is a business and you've got the police department, you've got the fire department, you've got the transportation and all of these are providing services to individuals," Harris countered.

"If you don't satisfy them, they'll go across the border and they'll go elsewhere to shop and to live and to work and so forth."

The mayor and the city council have already cut police and fire to the bone and the city has become unlivable.  Experts say bring on the emergency manager because city leaders just don't know what they're doing.

"The big issue is the long-term debt and the borrowing that the city's done going back to Mayor Cavanaugh.  That is total principal and interest almost $15 billion by itself.  If you don't deal with that, you can't fix this issue.  Nothing else will do," said Eric Foster, president of Foster McCollum White and Associates.

"What did I do in Benton Harbor?" said Harris.  "I took a $3.5 million public safety budget.  It's $2.5 million.  Public safety has never been better.  I combined police and fire."

Harris added whoever it is, he's going to have to slaughter the sacred and politically connected cows.

"The emergency manager sometimes has to do what the politicians won't do.  There are so many special interest groups that affect the decisions that are being made by the mayor and the council."

Detroit's politicians can't make tough decisions?  He can't be more right because guess what the mayor and the city council decided to do on Tuesday?  Hire yet more outside experts to count the money and find places to save it.

How much are we paying these new plan makers?  We asked Kriss Andrews, the guy we're already paying $220,000 to make the plan.

"The answer is if I sat down with a pencil and paper for 20 minutes I could, but I can't here today," he said during a news conference.

So far those contracts total $14 million.  It's interesting to point out that the mayor and the city council's budget combined equal just over $14 million.  I see a place to save some money.

And so finally you might wonder who is on the short list to become emergency manager.  One of the front runners is said to be Charlie Beckham.  His resume?  Former chief operating officer under Kwame Kilpatrick, chief administrative officer for Dave Bing and water department director under Coleman Young for which he served two years in prison in a bribery scandal.  Seriously.

The city's financial footing erodes by the day, but it's unlikely the governor would make a bold move this month at least.  We've got the auto show coming up and you don't need 4,000 bored journalists writing stories about Detroit's collapse instead of a new Cadillac.  But a decision's got to be made soon.  The city is in near anarchy.

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