Mar 12, 2013
Detroit Public Utility At Risk Under Emergency Management
Although few anticipate success, the Detroit City Council, without the support of Mayor Bing, went to court today to argue their appeal of Gov. Snyder’s finding of a “fi
nancial emergency” triggering the new Emergency Manager law. The City will assuredly have to choose between an Emergency Manager, a consent agreement, Chapter 9 bankruptcy, or arbitration — the options specified under the new law.
Yet, other important considerations hanging in the balance will impact the daily lives of Detroit residents. Last week, Democracy Tree reported on the dire situation with street lights being turned-off to save money, leading to increased crime and urban flight. Lighting is just one of many public assets that are at risk.
Circle of Blue reports that the Detroit Water and Sewage Department is unsure how the probable appointment of an Emergency Manager will impact that public utility. Subject to the Clean Water Act, the DWSD has been under federal oversight for several decades due to violations. Last week the Board of Water Commissioners passed a resolution with specific questions about the ulitity’s possible relationship with an Emergency Manager — they want to know just how much authority will be granted an Emergency Manager, and if the department will maintain its current autonomy. Circle of Blue speculates that any one of the following scenarios are possible:
- The utility could be restructured and its management privatized, like what happened in Pontiac, another Michigan city with an emergency manager.
- The utility could be sold off to investors for a one-time cash bounty.
- Nothing could change, since the chief problems with Detroit’s finances are the gushing deficits from the city’s general fund.
The DWSD does not receive any money from the City and is not a contributing factor in Detroit’s fiscal woes, but the concern (and it’s a very real one) is that under emergency management the public utility will be seen as a cash-cow to be sold to the highest bidder. Privatization is a troubling prospect, especially with something as vital as water systems. It is difficult to imagine how adding a for-profit layer could help the struggling utility.
A budget recommendation for the DWSD last summer suggested an 81 percent cut in its labor force, with a portion of existing employees being outsourced as contractual workers, bringing the total cut to around 63 percent. John Reihl, of AFSMCE 207, told the Free Press they were “just dreaming if they think they can operate the plant with less.”
The public utility clearly has some very serious fiscal problems of its own. The only reason a Detroit Emergency Manager would wish to inherit the DWSD, in addition to the woes of the City, would be to sell it off for a quick dime.
Amy Kerr Hardin of Democracy Tree
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