Next mayor must adjust to realities
Huge budget deficit, dwindling population, threat of takeover will test Detroit's leader.
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Whoever takes the Detroit mayor's office on New Year's Day will face a $300 million budget deficit, a recalcitrant union workforce and the potential that the city could run out of cash, sparking a state takeover of the city's finances.
The police and fire department budgets have been slashed, the city and its schools are rapidly losing residents and students and the public lighting system is in need of a revamp.
The U.S. Justice Department is overseeing constitutionally required upgrades to the city's police department and the suburbs are vying for control of the city's water and sewer department.
At the same time, the city's downtown is undergoing a dramatic revitalization and clean-up is frantic in preparation for the arrival of the Superbowl and its national spotlight.
It will be a daunting time for the next mayor.
"I think the crisis is here and whoever is mayor will have to deal with that crisis," said Dick Blouse, president of the Detroit Regional Chamber of Commerce. "That person can either pull it together without receivership or we'll go into receivership, and we'll have to make it work that way."
Blouse said the business community has been fairly split on who they back. He said he hopes that whoever wins will do so by a large margin, so that discrepancies with absentee ballots do not play a role in determining the outcome.
Important issues such as a regional transit plan, years in the works, is on the table and needs City Council approval and mayoral support, but the proposal has languished during the current political campaign, Blouse said. These and other issues need quick action, he said.
Should Hendrix win, it would be difficult for Kilpatrick to make progress on urgent priorities before leaving office. But between now and December, Kilpatrick must cut city spending - significantly -- to avoid running out of cash. His finance director, Sean Werdlow, told City Council recently that if major changes don't take place soon, the city could run out of money by the holidays.
Should the city miss paychecks to workers or payments to city contractors, it will prompt the state to consider appointing a finance manager to take over the city's budget, as Gov. John Engler did with Hamtramck and Highland Park. The state treasury department says Lansing has no interest in taking over Detroit's finances; but under state law, unpaid bills are one of several triggers that will require the state to look into the matter.
Meanwhile, the city's union workforce has been at odds with the mayor and has not been receptive to Kilpatrick's cost-saving proposals--including slashing pension and health care benefits, cutting workers and salaries.
If Kilpatrick wins, he would enjoy a new mandate that will imbue his administration with the power needed to make the necessary cuts. He could immediately begin slashing costs to balance the budget.
With so much at stake, people around Michigan are watching. Local powerbrokers were split on who they hoped would win. Many unions backed Hendrix, including the city's largest employee local, raising questions about whether -- if Hendrix is elected -- he will be able to make the tough cuts needed to bring the city into the black.
"The city government structure really hasn't shrunk to reflect the new reality of Detroit," said Betty Buss, policy director for Detroit Renaissance, a group of Detroit's most influential CEOs. "That right sizing needs to be accomplished. The quality of services needs to be improved and tax rates need to be reduced to create an environment in which both residents and job providers can flourish. The city has to become more competitive, not just with its nearby neighbors but with central cities across the world. We're really looking for someone who can manage a transformative process that needs to take place to make this city more competitive. That's a huge undertaking."
Major layoffs are "inevitable," and Kilpatrick or Hendrix must show the political will to get the job done. "That's not to say they're going to be easy or politically popular decisions," Buss said.
Other cuts, as well, have been suggested in numerous studies over the years, studies that sit on shelves collecting dust.
"A lot of that stuff suggested in the studies is still applicable. And it doesn't get done," Buss said. "These are hard political decisions. Working for city government, the school district, the post office, whatever, was the way to get into the middle class for a lot of minority families. Protecting these jobs was very, very important symbolically as well as financially for a lot of families. The idea of threatening those jobs that have been a godsend for families, that's hard."
Recievership could be helpful for the city, but it could also be a disaster, Blouse said. The city has a "huge debt, maybe larger than we even know," he said.
"It's an issue that's not going to go away. The flow of dollars just isn't there. Whoever's mayor will have to pool experts to figure out how to do this, to keep services intact and basic public safety. There's an awful lot that you aren't going to keep. We need the best experts."
You can reach lcollins at (313) 222-2300 or lcollins@detnews.com.
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