July 18, 2012 / 5:21 PM / 6 years ago

Detroit mayor imposes worker benefit, pay cuts

DETROIT (Reuters) - Detroit Mayor Dave Bing said on Wednesday he has imposed 10 percent pay cuts and other contract adjustments to the city workers in an bid to save the cash-strapped city $102 million a year.

The Detroit City Council on Tuesday had rejected by a 5-4 vote Bing’s plan for the cuts. But as part of an April consent deal that gave the state of Michigan more control of the city’s finances, the city’s duty to bargain with union is suspended and the mayor can impose the new contracts without city council approval.

“This is a tough day for me, a tough day for city workers and a tough day for all of Detroit,” Bing said in a statement on Wednesday. “However, it is a necessary day - but it’s still a tough day.”

Detroit has been hard hit by a steep drop in population, years of severe budget deficits and escalating employee costs. “The city can no longer borrow, hoping to cover this deficit pending. Without action the city will shut down,” Bing said.

If Bing is interested in attracting new business to Detroit as a way to boost its economy, the cuts to public safety officers from the fire and police departments is particularly wrong-headed, said Dan McNamara, president of the Detroit firefighters union.

Response time to fires in the city will continue to deteriorate said McNamara,as the city shuts 15 of its 66 fire companies as part of the cost-cutting proposals.

“I wonder how the insurance companies are going to respond to this,” said McNamara. “How are these businesses in Detroit going to react when insurance companies raise their fire insurance through the roof?”


The new contract terms were implemented late on Tuesday. “This means the city employment terms, including wage reductions and work rule changes, are effective immediately,” the mayor said.

Some $52 million of the $102 million expected in annual savings will come from healthcare benefit cuts, Bing’s plan shows. Some $2.5 million which were previously paid by the city to full- and part-time union officials will now must be reimbursed by the unions, a city’s statement detailed.

Other measures include reductions in the hourly shift pay premium, while additional days off, bonus vacation days, merit increases are suppressed. Also transfers and promotions which used to be based only on seniority will become more selective and based on other factors including education level, expertise, and performance, the city added.

“I know this represents a hardship and sacrifices for many city workers,” said Bing’s statement. “But as I’ve said before, I must make the best decisions for all Detroiters.”

Prior to the cuts, the city’s budget deficit stood at $197 million and its long-term debt at $7.9 billion.

One of the city council members who voted in the majority on Tuesday, JoAnn Watson, said Bing was balancing the budget on the backs of city workers who had already sacrificed enough while not being as demanding to the Wall Street banks the city owes.

“I want to thank the four council members who took a tough vote yesterday and were consistent in their efforts to restore financial stability to the City,” Bing said.

Representatives of some of the 48 unions for nearly 11,000 workers said that Bing took advantage of the financial crisis the city faces to impose new work rules and pay cuts without negotiations.

McNamara, president of the Detroit Firefighters Association, said city has “taken public safety and thrown it in the garbage.”

As younger firefighters have been laid off, the average age of the Detroit firefighter has increased to 44 years, and only 18 of the current 1,000 Detroit firefighters are under 30, McNamara said.

Reporting By Bernie Woodall, Editing by Tiziana Barghini and Sofina Mirza-Reid

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