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Government > News Hits

The "B" word

When Bing talks bankrupcy, is it bull?

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Published 7/29/2009

Detroit Mayor Dave Bing put it right out there: the possibility of the city filing for bankruptcy. But was he making an educated prediction or rattling his proverbial saber?

In an exclusive interview with the Detroit Free Press last week, the new mayor set the stage for what promises to be a dramatic showdown during the next several months as he attempts to deal with what he says could be an accumulated deficit as high as $400 million. He's pushing for cutting services, consolidating city departments and winning concessions from city workers.

If the city doesn't get its act together, Bing warns, appointment of an emergency financial manager is possible, and filing for Chapter 9 bankruptcy remains an option of last resort.

John Riehl, president of AFSCME Local 207, which represents about 950 workers in the water and public lighting departments, isn't buying Bing's forecast. Bankruptcy, he says, just won't happen.

"The Obama administration will be forced to help Detroit," Riehl says. "Detroit cannot be abandoned, pragmatically or politically."

Riehl accuses Bing of trying to balance the budget on the backs of union workers without looking to savings in the upper echelons of city administrators and contractors. "They haven't even touched that. Until they clean house, they're never going to be taken seriously and the workers understand that," he says.

Dave Boerger isn't buying Bing's threats either. A consultant for the Southeast Michigan Council of Governments, Boerger advises municipalities about fiscal management. Detroit's budget woes aren't that different from any other city, township or village that has lost population, watched tax revenue decline and had operating expenses rise, he says. Detroit is just magnified because it's the largest city in the state.

"I don't think there's any way that the powers that be would let the city go into receivership or even into emergency financial management," Boerger says. "They won't have to resort to that kind of a more drastic circumstance, in my view."

According the Michigan Department of Treasury, which tracks and scores a set of fiscal indicators for every municipality in the state, Detroit is on a state "watch list" based on its score from 2007, the latest available. Incidentally, Belleville, Grosse Pointe Shores, Harper Woods, Highland Park, Lincoln Park, Pontiac, River Rouge, Riverview, Taylor, Troy and Van Buren Township are also in that category.

In publicly addressing Detroit's budget problems, Boerger says, Bing is being a realist while others remain in denial, explaining, "It takes some time to get everybody more aligned along with what the reality is. I think that's what he's probably doing."

News Hits is edited by Curt Guyette. Contact him at 313-202-8004 or NewsHits@metrotimes.com.

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