U.S. Markets

Detroit mayor says Michigan shares blame for city's fiscal woes

DETROIT (Reuters) - Detroit Mayor Dave Bing argued against a state takeover of the financially strapped city on Wednesday, saying the Michigan government bears some responsibility for Detroit’s fiscal problems by slashing its revenue-sharing fund with the city.

City of Detroit Mayor Dave Bing talks about the future of the city during an interview in his office in Detroit, Michigan February 5, 2013. REUTERS/ Rebecca Cook

“The total amount of cutbacks in state revenue sharing to Detroit over the past 11 years is more than $700 million. Detroit’s current general fund deficit is $327 million,” Bing said in his State of the City address, under the prospect the state could soon appoint an emergency financial manager.

“So, it is clear that if Detroit had received its agreed upon share of revenues from the state, our financial picture would not be as grim today,” Bing said at the Detroit School of Arts in the Midtown neighborhood before about 250 people.

Michigan Governor Rick Snyder appointed a team in December to examine Detroit’s finances and determine if it needs a state-appointed manager, who could ultimately opt for bankruptcy for the city unless the state blocks the move.

Bing and the city council have been working to cut expenses and restructure the government to head off a state takeover or what would be the biggest Chapter 9 municipal bankruptcy filing ever in the United States.

Known as the home of the U.S. auto industry, which itself has recovered from near bankruptcy, the city of Detroit actually is home only to the headquarters of General Motors Co. Ford Motor Co. and Chrysler have long been ensconced in the suburbs.

Detroit, also known as Motown for its once-thriving music industry, has shrunk from America’s fifth-largest city to 18th in population as residents fled for jobs, better schools and safer streets. The homicide rate was up 9 percent in 2012, to a total of 411 killings.

Now home to just 700,000 people, the city is struggling to balance the cost of its services with its shrinking revenue.

In his speech, Bing said he has made difficult and unpopular decisions including job cuts and the privatization of some city services.

“Beginning tonight, it is time to change the conversation about Detroit. It is time to focus on the many positive changes taking place,” said Bing, a former professional basketball player who played nine seasons for the Detroit Pistons.

Under a consent agreement Detroit struck with the state last April, the city has made “significant progress” in some of the 25 reform initiatives that were identified to address chronic problems, Bing said.

“Despite the naysayers’ predictions, there have not been any payless paydays. No emergency manager to date,” Bing said, drawing some uneasy laughter from the crowd.

Detroit, which is checkered with abandoned and dilapidated buildings, is working through a public-private partnership spearheaded by Bill Pulte of Pulte Homes to tear down eyesore buildings, Bing announced.

To address the crime rate, Bing discussed his plan to move 100 or more police officers to street patrols and criminal investigations. His goal is to reduce violent gun-related crimes by 25 percent this year.

City Councilman Ken Cockrel, interim mayor before Bing, said he thought it was “from a technical standpoint,” the best speech he had heard from the mayor, though he would have liked “a little bit more substance with regard to the city’s finances.”

City Council President Charles Pugh said he wished Bing had been stronger in his opposition to the idea of emergency management.

“I think he should’ve been very clear that we don’t need it,” Pugh said. “And that there’s a way forward without somebody else coming in to run the city.”

Reporting By Ryan Felton, additional reporting by Karen Pierog; Editing by Mary Wisniewski and Christopher Wilson