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Pay Cuts Ahead In Detroit With Or Without Milestones, Officials Warn

Pay Cuts Ahead In Detroit With Or Without Milestones, Officials Warn

DETROIT— At a special city council meeting to discuss finances Tuesday, city officials said Detroit workers could see unpaid furloughs even if council members approve all contacts involved in a milestone agreement between the City and the State.

The Michigan Department of Treasury is holding $30 million in escrow until the city approves key contacts with restructuring and law firms.
The city’s financial forecast projects a $46 million budget shortfall by June unless pay cuts are implemented according to Program Management Director Kriss Andrews.

“Even were we to meet those milestones, even on the prior forecast … we would have had a [cash flow] deficiency June 30th,” Andrews told council members at Tuesday’s meeting. “We need to take some action beyond that $30 million. You can’t bridge a $46-47 million cash deficiency with $30 million. It doesn’t work.”

Councilman Ken Cockrel, Jr. said a recent memo from the mayor’s office stated otherwise.

“The obvious concern there is that that would seem to contradict even the mayor’s own memo Nov. 30th were he says, ‘however, I believe that we can avoid layoffs and unpaid furloughs if we act now to comply with the terms of the milestones agreement with the state.’ That’s right there. This is his memo,” Cockrel said.

Andrews also told council members to expect more milestone agreements in the months ahead as the State prepares to release future bond sale installments only under certain conditions. He said the announcement of further milestone agreements ahead of time was to prepare the council and avoid turbulence on crucial deadlines.

“Since I believe and most of us believe we’ll need more milestones agreements to get most of the proceeds from the bonds we felt that it was appropriate to be more inclusive of the city council in the process so it didn’t come as a surprise,” Andrews said. “The milestone agreement created more noise then we would have preferred. It would have been better had we included the city council sooner.”

City Council President Charles Pugh said he was not sure if he supported unpaid furloughs.

“We have to figure out how to manage our way through this. If there is no data to support furloughs then we should not do it,” He said, suggesting that higher salaried employees should take a hit before lower wageworkers. “People who make above a certain amount should take a certain cut.”

Council members JoAnn Watson and Cockrel agreed with Pugh.
Council members said that as money talks continue, they wanted to see better communication with the mayor.

“I saw the mayor at world AIDS day on Friday and said Mr. Mayor, you need to making your rounds. We’re here,” Pugh said. “We’re just a cell phone call away.”

“I think this body has shown the willingness to work and to compromise but it must be a dual compromise,” Councilman Andrew Spivey said.

“As the president has indicated: we’re here,” City council President Pro Tem Gary Brown said. “If you’re bringing restructuring team contracts on [Dec.] 11th I’d like to know that now or by the latest tomorrow. If we get it on the tenth like we got the [budget] amendment today, it’s a problem.”

Pugh criticized the Bing Administration for treating the city council as a business “rubber stamp” board.

“Your management team, including the mayor, is all business folk,” Pugh said. “If we were some rubber stamp board of directors showing it to us a day before is fine but this is government. This is different. We have due diligence, we can’t just rubber stamp.”

After Wednesday’s meeting to vote on the $29 million pension fund amendment, council members will meet on Dec. 11th to vote on key issues including restructuring contracts tied to the milestone agreement and a major land sale. 

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