Thread: Detroit Mayor Warns City Running Out of Cash

Detroit Mayor Warns City Running Out of Cash

Wednesday, August 12, 2009 9:32 AM

DETROIT -- Dave Bing may have to remove his mayor's hat for the one he wore as founder of Bing Steel as he tries to convince Detroit labor unions that a 10-percent wage cut will help keep the city out of receivership.

Bing met Monday with labor leaders about the poor state of Detroit's finances, saying the city could run out of cash within 70 days without concessions.

But the hard line taken by the professional basketball Hall of Famer and ex-business executive during contract negotiations with city unions is meeting resistance.

"Just like all the other mayors he is crying poverty, but has yet to rein in his own cost problems," said John Riehl, president of the 3,000-member American Federation of State, County and Municipal Employees Local 207. Riehl and other AFSCME leaders are pushing for a strike.

"He can't come in and force negotiations to get it accomplished in one month," Riehl said. "His effort to try and bully citizens around and threaten people -- we don't take that lightly."

City unions are working under expired 2005-2006 deals, and negotiations for new contracts began in spring 2008, Riehl added.

Detroit is facing a $300 million budget deficit. City services will almost certainly suffer regardless of whether wage concessions are granted.

Bing first approached the unions in early July about contract concessions, and gave leaders a 30-day deadline that passed last week. After Monday's hourlong meeting, Bing told reporters that Detroit will "go broke."

"We don"t have the cash flow to get us beyond October," he said. "If you're talking about running out of cash in the next 60 to 70 days, I can't overstate how dire the situation is."

If wage cuts aren't approved, he added, "there's a possibility that the city goes into receivership."

Due to the national recession and restructuring by Detroit automakers, the state is working closely with Detroit and other Michigan communities "to ensure their continued financial viability," said Megan Brown, spokeswoman for Gov. Jennifer Granholm.

Of the 13,000 city workers, about 11,500 are represented by unions. About 1,500 nonunion appointees will take a 10 percent cut by Sept. 1.

Bing compared Detroit's economic woes to those of General Motors Corp. and Chrysler LLC.

"They both went bankrupt," said Bing, who honed his business skills working at banks, a steel company and an automaker during his NBA summers.

The star guard was drafted second overall by the Detroit Pistons in 1966 and spent 12 seasons in the NBA.

In 1980, he founded Bing Steel in Detroit, which later grew into The Bing Group, an auto industry supplier. Bing turned over control of it to his daughters after being elected mayor in a May runoff to complete Kwame Kilpatrick's second term.

Kilpatrick resigned as mayor last September as part of pleas in two criminal cases stemming from perjury charges. He later served 99 days in jail.

Bing received more than 74 percent of the vote last week in a nonpartisan primary and will face off Nov. 3 against Tom Barrow for a full, four-year mayoral term.

Detroit will save about $3.5 million with the wage cuts by nonunion workers and $8 million if the 11,500 union employees take cuts, mayoral spokesman Edward Cardenas said.

Still, at least 1,000 layoffs can be expected.

The unions are aware of the city's financial troubles, said Yolanda Langston, Detroit chapter president of the Service Employees International Union. The union represents about 100 workers in Detroit.

Langston said her local is open to a pay cut.

"We are not asking for raises," she said after the meeting with Bing. "We're hearing that the labor is just being stubborn, and that is not the case here."

http://moneynews.newsmax.com/economy/de ... 46841.html

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