Since Detroit became the biggest U.S. city ever to file for bankruptcy when they filed last Thursday (with more than $18 billion in debt), the fiscal management, one could argue mismanagement, of Detroit’s revenues has been scrutinized and what has been revealed is jaw-dropping. Consider this fact: The Detroit Water and Sewerage Department (DWSD) has an employee that is paid $56K a year in salary and benefits to “shoe horses and to do general blacksmith work,” – but they have no horses. The job description hasn’t even been updated since 1967.
The DWSD is bloated, as evidenced by the fact that the department hires almost twice the number of employees per gallon than other large cities like Chicago operate with, so the horseshoer is just one example of why the DWSD has massive debt.
Combine wasteful spending for decades with a tax base that has declined from over two million residents to less than 700K , and the fiscal implosion of Detroit was inevitable. The fiscal behavior of the city leaders for years upon years provides a road map to fiscal collapse, and details decades of poor fiscal decisions that include over-spending, over-staffing, padding of city payroll, and rampant fraud and corruption.
The city says they cannot eliminate positions due to the collective bargaining agreement with the unions, which the local union president has responded to by saying that it is “not possible” to cut positions.
John Riehl, president of the American Federation of State, County, and Municipal Employees Local 207, went further than just rejecting cuts during an interview with the Detroit Free Press when he said that the WDSD actually needs MORE workers.
Stephen Henderson, the editor for the Editorial Page of the Detroit Free Press, did a detailed article on the “intolerable waste” last week in the WDSD, and wrote that the a recent independent report “Suggests that collective bargaining turns government into a provider of jobs instead of public services.”
The WDSD is just one department of the Detroit city government, yet represent s the fiscal irresponsibility throughout that has led to the unbelievable level of debt. Take a moment and think about the massive amount involved-we are talking about $19 BILLION!
Many of the same factors that led to the collapse of the auto-industry are again in play. Wasteful spending, overstaffing, graft, fraud, corruption, and salary and benefit packages that are inflated at a time of ever shrinking revenues are all part of what has brought Detroit to this point.
Another major factor that hastened and worsened the auto industry collapse was that many of the things that resulted in the bloated costs to manufacturers could not be addressed due to union agreements in place, and once again current union agreements prevent doing what is necessary to try to begin to rebuild. Unions, in the name of protecting jobs, are again having the opposite impact.
Declaring bankruptcy is just the first step in trying to rebuild what was once a vibrant, major American city that has a unique place in our nation’s history. If concessions are not made by unions, and until issues like crime, lack of city services, improved housing, etc… are addressed not only will Motown never rebound, it will continue to be a city in decline.
An honest review and discussion of the contributing factors that have now been repeated in the decline of Detroit must be embarked upon. This should not be a political discussion, but a discussion of what has worked and what has failed. If we as a nation continue to repeat the fiscal behavior that has driven major industries, towns, cities, and counties to bankruptcy, should we then be surprised when the nation reaches the same destination?
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