Detroit budget crisis: Workers face big blow to benefits

BY SUZETTE HACKNEY

Detroit Free Press

April 10, 2011

2011-2012 Financial Plan

• Detroit Mayor Dave Bing is expected to present Tuesday both a proposed 2011-12 financial plan that contains $200 million in cuts and additional revenue needed to balance the city's $3.1-billion budget, and a five-year deficit elimination plan that will include deep cuts to employee health care and fringe benefits.

• Bing's budget address before City Council will lay out his plan to suspend payment of a special allocation to the city's two pension funds next fiscal year, and his intent to ask the city's 48 collective bargaining units to renegotiate contracts in the hopes of gaining concessions.

Emergency Financial Manager?

• Bing is expected to explain that without the concessions, the city is in danger of having the state name an emergency financial manager -- someone with the power to dissolve the existing contracts anyway, according to sources familiar with the mayor's plan.

• City unions would have to agree to reopen labor talks just months after a three-year contract was imposed on the American Federation of State, County and Municipal Employees, the city's biggest union.

• "I don't believe we would be inclined to do that," said Catherine Phillips, AFSCME's lead negotiator. "There is an anti-union movement in this country, and Detroit and Mayor Bing are no different."

Details?• A suspension in payment to the city's general retirement

and police and fire pension systems accumulation fund. The fund acts as an investment supplement to cover money lost to the market. The savings is expected to be significant, based on previous payments. Annual reports show that for the fiscal year that ended June 30, 2009, the most recent data available, the city contributed $77.4 million to the pension systems.

• The collection of fees from insurance companies for EMS patient transports is expected to yield $7 million.

• The recovery and collection of personal income and property taxes from individuals and corporations is projected to bring in more than $20 million. The city will begin cross-referencing with the state those who file tax returns, and go after those who do not file in the city. State law would enable the city to recover owed monies from the past six years.

More Details

• A savings of $7 million through statewide and regional procurement contracts that would encourage municipalities to essentially buy services and supplies in bulk.

• A 10% citywide reduction in personal service or consulting contracts is expected to shave $6 million off the budget.

• "Mayor Bing will lay out a five-year plan to eliminate our deficit and put the City of Detroit back on solid financial ground," said Karen Dumas, Bing's chief of communications and external affairs.

• Bing will ask all of the city's 48 collective bargaining units to renegotiate labor contracts in an effort to increase the amount that retirees and current employees pay for health care by 20%.

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