Closer to a deal

By Rod Meloni - Reporter, CFP ®
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DETROIT - After a week of furious negotiations, the city of Detroit and the state of Michigan are on the doorstep of a deal.

All along this has been a negotiation over a contract and the latest iteration of the deal went before council late this afternoon.

Going page by page, council heard the nuances of this new deal with a packed council chambers and anxious onlookers.

Local 4 has learned what is in the "financial stability agreement," which is really a consent agreement by a more palatable name.

The first item that both Mayor Dave Bing and the City Council fought hard is the governor's desire to have a "financial advisory board." Initially, the governor wanted this nine-member board to have supervisory power. This is where the governor is drawing a line. He wants the city's turnaround to have real teeth, and this is the way to get there. This is all happening under Public Act 4 [the emergency manager law]. The governor, the mayor, the council and Treasurer Andy Dillon will all choose members of this board. This means council would end up ceding some power, a decidedly unpopular notion inside the city/county building.

Next, the mayor and city council will keep their jobs and most of their power will remain intact. They will also lead the city's turn around plan. Under this plan they would work closely with a new department called the project implementation office and will have a newly created position of chief financial officer along with a project manager. This group will work on not one-year budgets but three-year budgets. They will work on making certain the city's revenue projections match actual revenues and will expend considerable energy making certain the city lives within its means.


There is one especially thorny corner of this agreement. It has to do with union contracts. The governor has stated he believes the city's union concessions negotiated over the past few months are inadequate. As part of this deal under Public Act 4, the mayor would get the power to impose union contracts after they expire. Roughly 80 eprcent of the city's union contracts will expire at the end of June. Essentially, this would mean the mayor can negotiate with the unions but if there are not enough concessions in the deal he can take the cuts he needs. This will obviously send howls of outrage throughout the city. Just sitting in council chambers this afternoon there is consternation and two council members over this provision. You can expect to hear much more about this in the days to come.


One of the things City Council and the mayor have been in lock step on is state funding of this turnaround plan. They point to General Motors, to the state of New York [which is what the governor's plan is based on] and they all received cash infusions from the government as a way to get healthy financially again. On this point the governor is adamant, he is not providing any public money and there is none in this deal. Instead, what the governor is proposing is logistical assistance to help fix things like the city of Detroit Public Lighting Division, the Department of Transportation and even collect delinquent city income taxes.


Now, there is much more in the deal but you get the idea, the city is not holding a strong hand here and while many on council would like to exit the game, they can't. The mayor's office did not sign off on this deal and brought it before council hoping to get some traction. It's not working. It's likely council will want to continue negotiating, even though the state treasurer wants to have a review team vote on this deal Friday during the day. If council and the mayor insist, there is talk of another marathon bargaining session over the weekend to see if something can get hammered out with a possible council vote on Monday.

The question tonight is how much patience the governor is willing to display at this point.

In a public appearance yesterday in Detroit he said this should have been wrapped up long ago and is getting impatient. The deal is closer yet not close enough.

Statement from Detroit mayor, deputy mayor on agreement

This draft landmark agreement incorporates components of Mayor Bing's existing Financial Stability Agreement, and was jointly developed by the Mayor's office, the City Council and the State of Michigan.


"Today's special session of the Detroit City Council to consider a resolution to approve a financial stability agreement represents a significant milestone in addressing the City's financial crisis, decades in the making," said Mayor Dave Bing. "It won't get fixed overnight, but our partnership with the State will drive us as we remedy our financial crisis."


Of critical importance to Detroiters, this agreement preserves Charter and Executive and Legislative powers, including allowing the Mayor to hire his own executive staff, and outlines specific support from the State.


The agreement also provides the necessary mechanisms to execute the plan and insure the City's fiscal stability by:


  • Creating a financial advisory board, advising the Mayor's office and collaborating with the City to set yearly revenue targets; 
  • Requiring the City to adopt three-year budget; 
  • Creating a Project Implementation Office that reports to the Mayor and introduces a Project Manager to monitor and facilitate immediate project performance improvement; and
  • Providing a collaborative, performance-based process, ensuring the commitment of legislative support to improve City services such as the Public Lighting Department, the Department of Transportation and income tax collection.


Once the full Council's comments have been considered and incorporated, the document will be reviewed with the state and returned to the Council for approval.

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