Beginning in January, Detroit, mired in debt and a shadow of the fuel-injected powerhouse of years past, implements paid furloughs and “other cost-savings actions” to control staggering government deficits.
Mayor Dave Bing announced Wednesday that the city must implement the measures come the first of January to plug a$30 million hole in its budget, according to a Christian Science Monitor report.
“We will ensure that revenue-generating departments are not impacted by these cost-cutting measures. Most importantly, I want our citizens to know that public safety will not be jeopardized,” he said in a statement aimed at alleviating public concerns.
In a related matter, on Tuesday the city council voted 8-1 against hiring Miller Canfield, an international law firm with offices in Detroit, to shepherd the city though a fiscal reform proposed by the Michigan Department of Treasury last week.
The costs of Detroit pensions threaten to bankrupt the city if strident actions are not undertaken to right the city's finances.
Not hiring the firm means the city is not in compliance with state recommendations designed to provide the city with access to $30 million in bonds held in escrow since March. The bond money was part of $137 million that the state has raised on the city’s behalf through a debt sale.
The Miller Canfield proposal meant the state would have released $10 million to the Detroit immediately and an additional $20 million by mid-December.
Meanwhile, Mayor Bing said the vote “is one more example of how city council has stalled our efforts to bring financial stability to the city of Detroit.”
For his part, Council President Charles Pugh hit back at the Mayor, telling WXYZ-TV, the local ABC television affiliate, that the law firm “was shoved down our throat, and we felt like we were being forced into accepting one particular law firm."
Like many large American cities, Detroit is plagued by massive deficits and dwindling tax revenues during an extended economic down turn and faces mandatory fiscal balances including pension reform and more cutbacks.