Detroit's newly hired emergency financial manager, Kevyn Orr, began work contracting $5 million worth of consultation on ways to balance city books. Crain's Detroit says the turnaround expert and his team will address the city's growing budget deficit and liabilities. Meanwhile, local businesses chipped in to buy Detroit new public safety vehicles, says the Detroit Free Press.
Orr's Consulting Team
Crain's lists the following consulting firms hired to help find spending gaps in the city's budget. Miller Canfield Paddock and Stone PLC of Detroit will earn $300,000 for 18 months of service. Ernst & Young of Detroit was hired for one year at a cost of $600,000. New York City-based Miller Buckfire and Co. LLC will work on Detroit's finances for one year at a fee of $900,000. Southfield, Michigan, group Plante & Moran PLLC will charge Detroit $1.1 million for two years of work. Conway MacKenzie Inc. of Birmingham, Michigan, will work a one-year stint and cost the city $2.1 million.
The Detroit News says Orr, who will cost the city $275,000 in annual salary, has been charged with keeping Detroit out of bankruptcy court. Crain's reports that the city will have a $100 million cash shortage at the end of this fiscal year, had a $327 million deficit last year, and owes over $14 billion. Out of the debt, $8 billion is in pension and retirement health care. Orr and his consultants will look for ways to pare down those liabilities. He's looking for changes that are fair but also supportable. Orr said the city unions may have to renegotiate contracts.
The Detroit News says some locals are concerned that Orr, with his consulting firms, will only privatize union jobs and sell city assets. Despite concern, Orr will consider private bids to take over the Coleman A. Young Municipal Airport and city water and sewer departments. The airport will cost about $275,000 (of this fiscal year's $1.39 billion budget). The water and sewer departments are considered self-sustaining via revenue they generate. Orr plans to explore the city-state consent agreement for other outsourcing options, such as city payroll.
In his second official act as emergency manager (the first being to reinstate mayor and City Council salaries), Orr signed an order accepting $8 million in donations. Detroit Mayor Dave Bing had been working for some time to enlist help. The Detroit Free Press lists donators: the Penske Corporation, Blue Cross Blue Shield of Michigan, Chrysler Group, Ford Motor Co., General Motors, Quicken Loans, Kresge Foundation, and Platinum Equity. Donations will fund leases and maintenance of 23 emergency medical service units and 100 police cruisers. The city's aging emergency vehicles have been blamed for slowed response time. Cruisers include Dodge Chargers, Ford Tauruses, and Chevrolet Caprices. EMS units are Horton Terrastar ambulances. Mayor Bing announced the donations on Orr's first day in office, March 25. Orr was not at the press conference.
An educator and Michigan native, Marilisa Sachteleben writes about issues in her state's most pivotal city of Detroit.
- Politics & Government