The recession might technically be over but the going is still tough for the city of Detroit; today, Detroit Mayor Dave Bing announced that city workers would be taking a 10% cut in pay and decreased benefits.
The measure is being enacted in the hopes that it will save some $100 million dollars per year, Newser reports. And though The Detroit News reports that the city council voted 5-4 against the measure, the state government allowed the cuts anyway in light of the city’s financial distress. Bing argues that while the decision was difficult, it was necessary in light of the fact that the city spends $150 million more than it makes, and has made up the difference with borrowing.
In the mayor’s words, “The city can no longer borrow hoping to cover the deficit spending…Without action, the city will simply shut down.”
One union leader said he was “not surprised” by the move, and the reader will no doubt be unsurprised to learn Detroit unions will be challenging Bing’s decision in court . Indeed, the aforementioned unsurprised leader went on to say that Bing’s proposal to cut wages by 10% “…violates the state constitution (and) various statues of the (Public Employees Relations Act) that are still in effect. Quickness to do it is another example of (Bing’s) mean-spiritedness. This will have to be resolved in the courts and we’ll see how that plays out.”
Regarding the cuts, Jack Martin, Detroit’s CFO, said this: “We have to do this. We know it’s painful on our employees, but this allows us to fix the problem in an orderly manner. If we do nothing, there will be chaos.”