Detroit a day late, more than a few dollars short

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DETROIT - Detroit Mayor Dave Bing's staff first tweeted then trumpeted a major development on Thursday in the effort to wring union concessions from the city's hourly employees.

It read:

"Members of the City's non-uniform coalition of unions reached a tentative agreement with Mayor Bing and his negotiating team last night. This tentative agreement is the first meaningful step in achieving the necessary concessions and structural changes to resolve the city's financial crisis. 'The tentative agreement we've reached is not just about concessions. It's about how labor and management can work together in a fair and constructive way,' said Mayor Dave Bing. 'The agreement provides checks and balances that hold both unions and my administration accountable.'"

There is no question this is a noteworthy accomplishment since no other mayor since Hazen Pingree and perhaps even before could make such a claim.

The problem is it falls short in so many ways.

The Mayor has said repeatedly he needs $102 million in givebacks.

Notice that figure did not come up in the press release. In fact, no figure came up in the press release at all. That's because he's not made his goal, just yet. The problem is he's been chipping away at this since last November, moving each deadline up as the city's recalcitrant unions refused to agree to the mayor's concessionary demands. 

Tonight, the mayor continues trying to get the police union to agree to the contract AFSCME and The Teamsters and SEIU coalition tentatively green lighted. The bus drivers at the ATU and the firefighters are likely next in line whether the police agree or beg off.

So let's look at what's in the contract. Local Four News has learned it looks like this:

1.)    A 10 percent pay cut in exchange for eliminating the furlough day program. That's where city employees took a work day off without pay.

2.)    Health care costs will likely go up for every employee. There is a very complicated system where those in the PPO program paid a10 percent co-pay and those in the HMO paid a 20 percent co-pay. The new system would equalize that disparity but also raise the required payments with increased deductions.

3.)    Reduced defined benefit pension payments to unvested current employees. They will receive a full pension credit for years worked but the multiplier used to calculate pensions will drop nearly a full point from 2.2 to 1.5 for those unvested employees going forward.

4.)    New Hires will get no defined benefit pension at all. Instead they will start out with a 403b defined contribution plan where they can set aside 5 percent of pay in order to get the City's 5 percent match

5.)    Early buyouts of employees nearing retirement. There is a sliding scale of these employees being able to apply "bank time" [unused vacation and sick time] toward a final payout.

6.)    Elimination of daily overtime. This means instead of getting four hours of overtime for working one 12-hour day, a worker would start calculating overtime after working 40 hours in a week.

[This apparently was agreed to last year and is not a true highlight of the contract, it simply formalized that prior agreement]

 This tentative deal was agreed to at about 10:30 p.m. Wednesday night Feb. 1 when Mayor Dave Bing went to AFSCME headquarters on West Lafayette Boulevard to push the deal over the top with AFSCME Chairman Al Garrett. City CFO Chris Brown did most of the heavy lifting to get the deal with the Union Coalition negotiators before calling in the big guns to finalize the deal. Union sources tell Local 4 News Brown and the mayor used the possibility of an emergency financial manager as a club every time the talks bogged down. The deal apparently affect roughly 55 percent of the city's union workers; 6000 of the 11,000 on the payroll. That explains why the mayor is working with the police now.

Still several union officials I spoke with today doubt their rank and file will agree to this tentative deal.

One said, "It's a choice between fear and anger." Do you fear the emergency manager or are you angry over the similar givebacks the mayor extracted last year? Some of those officials say they may not even recommend the rank and file pass the agreement.

The coalition is scheduled to meet Friday, Feb. 3, to set up the union local presentation and voting schedule. It's likely to come in the next week and end in two weeks.

This is where the city is coming up a day late and more than a few dollars short.

The governor set Feb. 10 as the deadline for the city to come up with a financial plan he can live with. He and the treasurer want this plan in place and feel confident it will deal not only with the immediate budget deficit problem but the overarching long term debt like the $2 billion unfunded pension liability the city faces. If, in fact, it takes two weeks for only 55 percent of the union employees to even vote on this tentative contract and it does not contain the savings the mayor says he needs; well it's yet another unmet Detroit City financial deadline in a long line of them over recent years.

I will not speculate whether this deal will fly, nor will I attempt to guess whether the mayor can get to his $102 million goal. It does not really even matter at this point. The city is running out of cash. CFO Chris Brown told department heads last week to only pay essential bills.

The day of reckoning is coming and, as usual, the City and its employees are not prepared.

It's the tragedy of this city's sad history. 

It's as if everyone believes empty coffers are impossible and even if they do run dry they'll somehow get refilled again.

Let's face it, property taxes account for the lion's share of what can increase the City's revenues. The average home value is just somewhere north of $7,000 according to recent statistics I've reported. How much revenue does a $7,000 home value generate; $100 if you're lucky and that assumes the homeowner will pay.

It is wishful thinking that the city can somehow avert a rocky shoreline if the cash runs dry and not end up looking like the Costa Concordia. It's nice the mayor made this headway, but it simply is not enough fast enough. I refer you to yesterday's column, Detroit prepare for a consent decree… or even worse.

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