Fiscal cliff has become the latest go-to political metaphor. It may be apt for the federal budget situation, but Detroit’s fiscal crisis is less a lemming racing toward the abyss and more like Michael Jackson’s baby—dangling over a high-rise balcony railing.
Detroit long ago crossed the rubicon. The only questions now are when does someone drop the baby and how hard will it land.
Based on the events of this week, it’s fair to assume the fall will come sooner rather than later and the landing will not be soft.
City Council voted yesterday to reject a proposed contract to hire Miller Canfield to work with the city through the budget stabilization process.
That is, we must acknowledge, is Council’s right.
However, the consent agreement City Council approved earlier this year required consideration of such a contract and Lansing has decided that, without the Miller Canfield deal, it will not release the next round of emergency funding to help Detroit stave off insolvency.
What should have been a perfunctory approval didn’t happen. Council says Mayor Dave Bing’s administration refused to be flexible on small but key details. Bing says it’s his prerogative to hire the firm of his choice, adding that Council is playing politics. Either way, and there is plenty of evidence to suggest both sides have behaved badly, the city is out $10 million it desperately needs.
Right now, Detroit faces a possible $30 million cash crush that could potentially lead to payless paydays.
On Wednesday afternoon, Mayor Dave Bing, along with the city’s Chief Financial Officer Jack Martin and Project Manager Kriss Andrews, announced a contingency plan in case they are unable to reach accord with City Council—unpaid furloughs.
“In order to compensate for the deficit, the City will begin to institute unpaid furloughs and other cost-saving actions, effective January 1, 2013,” Bing said Wednesday afternoon. “We will ensure that revenue-generating departments are not impacted by these cost-cutting measures.
Bing and Martin say they’re confident they can save $30 million with these furloughs.
For perspective, the city extracted $100 million in concessions from unions early this year. Without effecting public safety or those departments that bring in revenue and without actually laying anyone off or missing a pay period, Team Bing says there is another $30 million to squeeze from this stone. How they’ll do it specifically, they don’t yet know. But they are sure it can be done.
If this drama seems oddly familiar, it’s because it’s a regular show. Detroit faces an immediate budgetary crisis, Council balks at Bing’s planned response, Bing threatens dire consequences—magically, they’ll never impact police and fire—and, after much acrimony, some short-term accommodation is reached at the 11th hour. Then we all wait for the next crisis moment.
In the meantime, the city’s long-term financial problems remain unresolved while city services and quality of life for residents decline.
"Bankruptcy is not an option," Martin said on Wednesday. Does anyone still believe that? Rick Wagoner once said the same thing about GM.
Detroit is losing its grip on the proverbial baby and its leaders appear unable to lift it back over the ledge. At this point, perhaps, we must resign ourselves to the fact that this baby will fall—and get busy constructing a safety net below.
