Detroit Mayor Dave Bing announced Wednesday that he will implement pay and benefit cuts to union workers - effective immediately.
One Tuesday, Detroit City Council voted against the proposed cuts five to four.
The plan calls for the implementation of $102 million in annual savings. Included in the savings is a 10 percent wage cut, as well as significant changes to health care and work rules.
Union concessions are a big part of the city’s budget. On July 1st, the budget for the fiscal year began, which called for $250 million in savings. Due to the savings, about 2,600 jobs will be cut.
About the concessions
All city workers will be forced to take a 10 percent pay cut and they will no longer get furlough days in exchange. Under work rule change, Detroit Police Chief Ralph Godbee could put officers on 12-hour shifts.
The new contract also calls for about $52 million in savings by changing the city's health care plan. This includes cutting dental and vision coverage for retirees and increasing co-pays on insurance, according to the release.
Other changes include the increase of contributions from employees on prescription drugs and changes to pension and work rules.
Mayor Bing's statement
Mayor Bing released the following statement on the 2012 City Employment Terms:
For the past several years our City has spent approximately $150 million per year in excess of the cash we received. This difference was covered by annual multi-million dollar borrowing. The City can no longer borrow, hoping to cover this deficit spending. Without action the City will shut down.
This is a tough day for me, a tough day for City workers and a tough day for all of Detroit. However, it is a necessary day – but it’s still a tough day.
Last night, following the process outlined by the Financial Stability Agreement, and after the Detroit Council voted against the City Employment Terms, I directed my administration to impose the CETs to continue the process to fiscally stabilize the city. This means the City Employment Terms, including wage reductions and work rule changes, are effective immediately.
The City will save $102 million dollars annually from the implementation of these terms. These savings are a key component of my administration’s plan to stabilize the City’s financial condition. And I want to thank the four council members who took a tough vote yesterday and were consistent in their efforts to restore financial stability to the City.
Let me say again, none of us – not me or anyone in my administration – takes any pleasure in this decision. I know this represent a hardship and sacrifices for many city workers. But as I’ve said before, I must make the best decisions for all Detroiters.
COMPLETE COVERAGE: Detroit City in Crisis