Mr. Bing's Turnaround
Detroit Mayor Dave Bing this morning unveiled his plan to save some $500 million over the next two years – and, potentially, pull the city from the brink of financial collapse. As I wrote in my profile of Mayor Bing last month, the former NBA star and steel executive assumed the mayoralty in a special election last May, following the departure of Kwame Kilpatrick. By nearly every measure, Bing inherited a mess: Detroit is saddled with a budget deficit that's at least $275 million. Nearly one-third of Detroit's estimated 900,000 residents is unemployed. He has moved to reduce the city's job roll from 13,200 to about 12,000. The main point of Bing's turnaround strategy: Detroit's sprawling government must shrink sharply to be proportionate with a city whose population has been more than halved from its 1950s peak.
Bing presented his turnaround plan in a press conference this morning, at City Hall. Some key takeaways:
1. Restructure Detroit's $8.4 billion debt.
2. Restructure some purchasing contracts and cut emergency purchases. Projected savings: $20 million.
3. Consolidate city-owned real estate. It's unclear how this idea will be executed, or how much it might save. It's tricky: it will require significant renegotiation with current tenants, some of whom are likely to resist. Secondly, it could mean even more vacant property in a city with too much of it.
4. Privatize management of City Airport (not to be confused with Detroit Metropolitan Wayne County Airport, known as DTW). Projected savings: $2 million.
One of the most startling parts of the report: “The City is at risk of running out of cash to settle obligations at several points throughout the next year (October 2009, January 2010, and especially by late spring 2010)." The report also called the city's existing management of waste “inadequate.”