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Wouldn't surprise me either way. I feel, however, that it is inevitable. The mayor and city council do NOT get along and most of the unions are not willing to make the changes needed to start to correct the problem. Pensions are killing them and will only get worse. And, unioins and pensions are only symptomatic of the problem. There problem like so many similar older cities is how do you shrink a city. You've got infrastructure for 1.5M and only have 500k residents. Streets, sidewalks, street lights, water and sewer, city parks.
They've been trying to convert some large tracts into urban farmland but too many hurdles at city hall . . . and WTF do you do with the 3 people that still live on the block and that don't want to move?
SAD. But perhaps better titled: "I can give you anything but $$ baby." Where to start on this one? The EM law (which many of us consider unconstitutional) basically says a city (or other entity) is bankrupt and needs the sate's helping hand. Geez - this helping hand consists of stripping unionized workers of their *##!!** contracts and other austerity measures. State ain't done a damned thing to help these folk. It's like 2 different worlds here in Michigan. Sure, they've made mistakes. We all have. But the citizens of a state can't help their biggest city? Used to live half hour north. Great city with many cultural activities - plays at the Fox, Fisher & Gem theaters, Jazz festivals along the river. Took grad classes at WSU - a great city university. Tigers baseball. This all just sucks!
"Orr arrives in Detroit as perhaps the most competent person ever to walk through the doors of City Hall. He's got an impressive turnaround pedigree, as well as a tanker full of hubris. If the job can be done, I believe he's the one who can do it."
Yeah, he seems to be a good choice by the Gov. However, I really do not see how he can avoid bankruptcy. Sorry, I love Detroit, but when you build and operate a city for 3M and you're down to 700K the legacy costs are enormous. Shrinking a city by 75% is hard, but how do your shrink your unfunded liabilities by 75%?
Here in Michigan, they've been cutting taxes on business and reducing revenue sharing with the local gov'ts. All the older cities are screwed because so much of their tax base has moved to the suburbs while they've been resistant to changing their workrules and labor agreements with their employees particularly police and fire. All y'all better look around you neighborhood because police and fire pensions and benefits are going to bankrupt us all. Even when the pensions are sort of funded, the benefits are not.
And when all is said and done, I don't think that Detroit, Flint, Pontiac and Benton Harbor are as bad as some of the cities in California and I don't know anyone anywhere that's as screwed as the state of Illinois and their state pensions.
ticktock, ticktock . . . the unfunded liability clock is ticking
Reply to @Old_Joe: This, unfortunately, typifies the "take no prisoners" approach you often employ here. Wasn't enough for SF to whip Detroit in the WS. Now you'd go & give the whole #*#*!! city to the Cypriots. Hey -- you still got that governor there that can't pronounce the state's name? What was it? "KAL-EE-FOON-YA" or something?
Illinois is probably the worst off, but it doesn't seem to get talked about. I'm just waiting for "The Simpsons" to match reality and have a huge tax increase or something similar be called a "temporary refund adjustment."
Born in Detroit – well, just north of the city limits in Warren. I lived in downtown in ’69 when the National Guard had to be called in to squelch the citywide riot. (I think it was ’69 – it’s been so long ago) We hunkered down for almost a week. The gunshots continued for days. By 1972, I could read the gang tags on the wall… the bigger the political promises, the easier it was to get elected. It was time to leave a high paying job and seek safer ground in the burbs. But the burbs were in their own little world and couldn’t see the bigger picture through their picture window. Found a decent but smaller paying job in Denver and roared out of Motown. As they use to say, and probably still do, “Motown is Notown”.
Where to start in Detroit?? Here's a few ideas: -Mandatory withholding of city taxes from paycheck. No deduction for "working out of city". Same city tax rate for residents and non-residents. -Start collecting property taxes (about half uncollected) by forcing foreclosure - current owner should not be allowed to buy back at auction. -Eliminate heathcare coverage for current and future city retirees. -Reduce pension for upcoming retires (may require bankruptcy). -No free cars for any city employee. -Provide incentive to move out of desolate areas, e.g., property tax waiver for new location in Detroit for set period. -Only 401k option (no pension) for all city employees going forward. -Eliminate long shifts for police/fire. -Let Michigan take over Belle Isle - no lease, but no charge to Detroit from Michigan either. -Come up with realistic property taxes (lower) on homes with real value (taxes are currently at least twice what suburbs pay for same house). -City ticket tax for major Detroit sports teams. -Cut Detroit City Council pay dramatically and eliminate most of their staffs and "benefits".
Reply to @Flack: Glad you landed in CO - have heard nothing but good things about it (aside from the wacko shootings that unfortunately happen everywhere). I enjoyed my years in Oakland County north of Detroit. But, knew and visited folks who lived happily in the city. There were some beautiful high rise condos along the river with views of the river & Windsor (and guarded entrances). Not my cup of tea - but these people seemed happy, and certainly close to the many civic & cultural activities. Couple rules of survival they taught me: (1) Don't stop at red lights after dark and (2) choose an apartment above the 5th floor.
Added in hindsight. The people I knew living in luxury condos near the river are very much unlike the masses living in poverty or near-poverty in Detroit and many of our major cities. I doubt many of us here at MFO can really relate to that. I intentionally stayed out of the "wealth distribution" thread - and would guess you did as well. But, when we veer off into street crime, homelessness and decrepit housing, we're really touching on that other social issue - one few of us want to touch.
Hank, This may sound funny but I felt that we had something in common aside from investing... yeah, Michigan. I lived and worked in downtown Detroit in the advertising business. Moved out to Dearborn - nice quiet place - before moving to Denver.
Some good ideas and they do need to take action but I'll have to wait and see.
#2 should be dealth with by the Land Bank program which allows the 'city' to seize property with back taxes in as little as a year and get a scrubbed title free of any and all liens. This has to be coupled with #6 because you need to clear vast tracks of land - say 10 square blocks and bulldoze everything - tear up the streets, streetlights and sidewalks, disconnect the water and sewer and either turn it into urban farm or let it revert to nature [read: you have to downsize the city].
With #3, you should provide health insurance for current employees but nothing in retirement. This has to be grandfathered but you set your current employees up with an MSA to handle their health care needs in retirement. Same/same with the 401K vs. a DB pension. You can't go back, but you can strike a better pose going foward.
The state just upped the copay for public health coverage to 20% but this is probably not going to be enough for some of the cities and counties. More is going to probably require bankruptcy and it will for sure if you want to reduce existing pensions.
Geez, Fiacano's chosen driver is a retired deputy getting a pension of $105K. Now HTF did some depute sheriff wind up with a pension of $105!!!???!! It's easy grasshopper, you take only the finally year's compensation to calculate the pension and instead of using a multiplier of 1.5 (state of mich) it might be 2.5 (city of lansing) or even as much as 3 or 3.5. Also with only counting the single last year's pay, you can cram all your unused sick and annual leave and because you have such seniority you can work max OT in the last year. Hell, there are cops and firemen that never made more than $50K with pensions approaching $100K. That does not compute and will never compute. With the state DB pension, you took the highest 3 years to average and used a 1.5 *. The most I made was ~$65K and my pension is ~$35K.
One thing you didn't mention though you alluded to it was that they have to start taking a regional approach to Detroit and all the other major old city centers around the country. And politically, this is not viable at the present time.
All good points Rono. Can you imagine the City saying "we won't let you take over our island (Belle Isle), in fact we won't even let you lease it from us and then improve and manage it for us for free as a State Park"??!! When I hear stuff like this, I think about Richard Proenneke's "Alone in the Wilderness" special on PBS. I could see me living in that log cabin in Alaska real easy...
Just after the election one of their city council members was shown on TV telling the Pres, that they got him elected and it was time for him to bail them out. I was humiliated. Sorry. Well bred peeps dont' do that stuff. Bad form and atrocious manners. That is a perfect example of why you need to have an EFM in some cases. Sorry but there are some elected bodies politic that are more concerned with votes or contributions than doing what is right for your citizens. And this matters to me because I AM an elected politician. Our little corner of the world has a balanced budget and zero legacy costs. Granted, we came to the party later than so many of these municipalities and we're small, but I still don't see any of them really trying to fix their problems. And our legislature is packed with religinazi creeps that really shouldn't be allowed to even vote, leave alone hold office.
...and the madness continues: "Encouraging civil disobedience, the Rev. Jesse Jackson criticized the state takeover of Michigan’s largest city today, calling on citizens to fight back with Detroit days away from being controlled by an emergency financial manager. They also said people already are engaging in the "slow down in Motown" by causing traffic congestion on area freeways in protest of the emergency manager appointment. Meanwhile, U.S. Reps. John Conyers Jr., D-Detroit, and Gary Peters, D-Bloomfield Township, want the Government Accountability Office to investigate the emergency managers in Michigan as the state prepares to take over Detroit's finances on Monday."
Comments
Bloomberg:
Distressed Detroit Buffeted by Dueling Reports on State Takeover
Wouldn't surprise me either way. I feel, however, that it is inevitable. The mayor and city council do NOT get along and most of the unions are not willing to make the changes needed to start to correct the problem. Pensions are killing them and will only get worse. And, unioins and pensions are only symptomatic of the problem. There problem like so many similar older cities is how do you shrink a city. You've got infrastructure for 1.5M and only have 500k residents. Streets, sidewalks, street lights, water and sewer, city parks.
They've been trying to convert some large tracts into urban farmland but too many hurdles at city hall . . . and WTF do you do with the 3 people that still live on the block and that don't want to move?
alas and alack,
peace,
rono
Here's a more balanced story from the Detroit Free Press - not exactly your idea of a "liberal" leaning publication. http://www.freep.com/article/20130228/NEWS01/302280131
http://www.freep.com/article/20130317/NEWS01/303170193/I-m-paid-up-on-my-taxes-now-Detroit-s-emergency-financial-manager-says
From The Detroit News: http://www.detroitnews.com/article/20130317/OPINION03/303170312#ixzz2Nr2Iu0JW
Yeah, he seems to be a good choice by the Gov. However, I really do not see how he can avoid bankruptcy. Sorry, I love Detroit, but when you build and operate a city for 3M and you're down to 700K the legacy costs are enormous. Shrinking a city by 75% is hard, but how do your shrink your unfunded liabilities by 75%?
Here in Michigan, they've been cutting taxes on business and reducing revenue sharing with the local gov'ts. All the older cities are screwed because so much of their tax base has moved to the suburbs while they've been resistant to changing their workrules and labor agreements with their employees particularly police and fire. All y'all better look around you neighborhood because police and fire pensions and benefits are going to bankrupt us all. Even when the pensions are sort of funded, the benefits are not.
And when all is said and done, I don't think that Detroit, Flint, Pontiac and Benton Harbor are as bad as some of the cities in California and I don't know anyone anywhere that's as screwed as the state of Illinois and their state pensions.
ticktock, ticktock . . . the unfunded liability clock is ticking
peace,
rono
Take care.
I lived in downtown in ’69 when the National Guard had to be called in
to squelch the citywide riot. (I think it was ’69 – it’s been so long ago)
We hunkered down for almost a week. The gunshots continued for days.
By 1972, I could read the gang tags on the wall…
the bigger the political promises, the easier it was to get elected.
It was time to leave a high paying job and seek safer ground in the burbs.
But the burbs were in their own little world and couldn’t see the
bigger picture through their picture window.
Found a decent but smaller paying job in Denver and roared out of Motown.
As they use to say, and probably still do, “Motown is Notown”.
-Mandatory withholding of city taxes from paycheck. No deduction for "working out of city". Same city tax rate for residents and non-residents.
-Start collecting property taxes (about half uncollected) by forcing foreclosure - current owner should not be allowed to buy back at auction.
-Eliminate heathcare coverage for current and future city retirees.
-Reduce pension for upcoming retires (may require bankruptcy).
-No free cars for any city employee.
-Provide incentive to move out of desolate areas, e.g., property tax waiver for new location in Detroit for set period.
-Only 401k option (no pension) for all city employees going forward.
-Eliminate long shifts for police/fire.
-Let Michigan take over Belle Isle - no lease, but no charge to Detroit from Michigan either.
-Come up with realistic property taxes (lower) on homes with real value (taxes are currently at least twice what suburbs pay for same house).
-City ticket tax for major Detroit sports teams.
-Cut Detroit City Council pay dramatically and eliminate most of their staffs and "benefits".
Added in hindsight. The people I knew living in luxury condos near the river are very much unlike the masses living in poverty or near-poverty in Detroit and many of our major cities. I doubt many of us here at MFO can really relate to that. I intentionally stayed out of the "wealth distribution" thread - and would guess you did as well. But, when we veer off into street crime, homelessness and decrepit housing, we're really touching on that other social issue - one few of us want to touch.
Hank,
This may sound funny but I felt that we had something in common
aside from investing... yeah, Michigan.
I lived and worked in downtown Detroit in the advertising business.
Moved out to Dearborn - nice quiet place - before moving to Denver.
Hope your managing your investments wisely,
Flack
Some good ideas and they do need to take action but I'll have to wait and see.
#2 should be dealth with by the Land Bank program which allows the 'city' to seize property with back taxes in as little as a year and get a scrubbed title free of any and all liens. This has to be coupled with #6 because you need to clear vast tracks of land - say 10 square blocks and bulldoze everything - tear up the streets, streetlights and sidewalks, disconnect
the water and sewer and either turn it into urban farm or let it revert to nature [read: you have to downsize the city].
With #3, you should provide health insurance for current employees but nothing in retirement. This has to be grandfathered but you set your current employees up with an MSA to handle their health care needs in retirement. Same/same with the 401K vs. a DB pension. You can't go back, but you can strike a better pose going foward.
The state just upped the copay for public health coverage to 20% but this is probably not going to be enough for some of the cities and counties. More is going to probably require bankruptcy and it will for sure if you want to reduce existing pensions.
Geez, Fiacano's chosen driver is a retired deputy getting a pension of $105K. Now HTF did some depute sheriff wind up with a pension of $105!!!???!! It's easy grasshopper, you take only the finally year's compensation to calculate the pension and instead of using a multiplier of 1.5 (state of mich) it might be 2.5 (city of lansing) or even as much as 3 or 3.5. Also with only counting the single last year's pay, you can cram all your unused sick and annual leave and because you have such seniority you can work max OT in the last year. Hell, there are cops and firemen that never made more than $50K with pensions approaching $100K. That does not compute and will never compute. With the state DB pension, you took the highest 3 years to average and used a 1.5 *. The most I made was ~$65K and my pension is ~$35K.
One thing you didn't mention though you alluded to it was that they have to start taking a regional approach to Detroit and all the other major old city centers around the country. And politically, this is not viable at the present time.
alas and alack,
peace,
rono
Just after the election one of their city council members was shown on TV telling the Pres, that they got him elected and it was time for him to bail them out. I was humiliated. Sorry. Well bred peeps dont' do that stuff. Bad form and atrocious manners. That is a perfect example of why you need to have an EFM in some cases. Sorry but there are some elected bodies politic that are more concerned with votes or contributions than doing what is right for your citizens. And this matters to me because I AM an elected politician. Our little corner of the world has a balanced budget and zero legacy costs. Granted, we came to the party later than so many of these municipalities and we're small, but I still don't see any of them really trying to fix their problems. And our legislature is packed with religinazi creeps that really shouldn't be allowed to even vote, leave alone hold office.
and so it goes,
peace,
rono
Meanwhile, U.S. Reps. John Conyers Jr., D-Detroit, and Gary Peters, D-Bloomfield Township, want the Government Accountability Office to investigate the emergency managers in Michigan as the state prepares to take over Detroit's finances on Monday."