By Steve Neavling
DETROIT, April 3 (Reuters) – Detroit’s new state-appointed emergency manager on Wednesday disavowed letters sent by the mayor’s office saying that the city would stop honoring contracts with its police, fire and paramedics’ labor unions.
The apparent miscommunication between Mayor Dave Bing and Kevyn Orr, the former bankruptcy lawyer brought in to clean up Detroit’s finances, highlights the challenges Orr may face as he assumes increasing power in the biggest state takeover of an American city in more than two decades.
Written to Michigan’s five commissioners of employment relations, the letters declared that as of March 28, the destitute city considered itself in receivership status and no longer bound by its union contracts. March 28 is the date when a Michigan law went into effect giving the emergency manager wide powers including to abrogate union contracts.
Orr’s spokesman, Bill Nowling, said the emergency manager had no warning that the letters would be sent.
“That letter was not authorized by the emergency manager and we are looking into it,” Nowling said. “Any action of that sort has to be authorized by the emergency manager and this was not.”
A spokesman for Mayor Bing, who has said he will try to work with the emergency manager, declined to comment.
According to a copy of the letters, written by Lamont Satchel, the city’s director of labor relations, the city was freed from all collective bargaining agreements under state law once it was in receivership.
“The City is no longer obligated to participate in collective bargaining,” said the letters, which were given to Reuters by a union official copied on the correspondence.
The letter also declared the city’s withdrawal from all mediations and arbitrations and ordered Michigan’s bureau of employee relations to dismiss any pending union issues. The bureau mediates and arbitrates labor disputes on which the city and its unions cannot reach agreement.
The city’s unionized police, fire, and paramedics are working under contracts imposed on them last summer by Mayor Bing, which cut their pay by 10 percent. Employees also were required to pay 20 percent of their medical costs.
Detroit has agreements with some 48 unions, and outside analysts have said the city needs concessions from organized labor in order to restore financial health. The city is running a $100 million annual budget deficit and a state report said it has some $14 billion in long-term debt.
Orr, a former bankruptcy lawyer who worked on the restructuring of auto company Chrysler, was appointed last month by Michigan’s Republican Governor Rick Snyder despite objections from elected city officials.

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  • Michigan Gov. Rick Snyder

    Gov. Snyder had campaigned aggressively for Michigan voters to keep PA 4, the emergency manager law. After it was repealed, a similar law was passed through (along with right-to-work and other legislation) in December.

    In a Nov 2012 interview with The Huffington Post, Gov. Rick Snyder argued against cities in Michigan like Detroit filing for bankruptcy.

    “Theoretically, if you were able to do Chapter 9 in an efficient fashion, in a structured fashion, where you had everything lined up, you could actually address some of those issues, probably in a more total approach. But the track record, so far, has been pretty dismal. And the associating stigma of what it does, trying to get people to go there in the interim, is even worse.”

  • Andy Dillon, Treasurer, State of Michigan

    Dillon headed the six-member financial review team which declared the city in a state of emergency.

    <a href=”http://www.detroitnews.com/article/20130219/METRO01/302190407″>At a press conference</a> to announce the team’s findings, Dillon said, “We believe there’s a financial emergency in the city and that there’s no plan in place to correct the situation.”

    “We gave the city every chance to avoid the outcome we’re recommending to the governor today.”

  • Detroit Mayor Dave Bing

    An hour after a state-appointed financial review team unanimously declared that the city of Detroit was in a state of financial emergency, Mayor Dave Bing issued a statement that began with an admission that, yes, the city’s finances are in a poor state.

    “Certainly I am not surprised by the findings of the State’s financial review team. My Administration has been saying for the past four years that the City is under financial stress.

    If the Governor decides to appoint an Emergency Financial Manager, he or she, like my Administration, is going to need resources — particularly in the form of cash and additional staff.”

  • State Senator Coleman A. Young II

    Young issued this statement following the state review team’s findings.

    “This is going to be a usurping of our democracy. I feel this was a set-up from the word go. If the State listened to reform measures suggested by citizens in the City of Detroit, we would not be in this situation. How can the State fix something they are culpable for? I am as outraged as I am heartbroken about this systematic dismantling and take-over of our City. The people will not let this stand, nor will I.”

  • Charles Pugh, Detroit City Council President

    In 2011, Pugh said that city officials had the power to fix the city’s finances.

    ““Talking about an emergency manager is a waste of breath,” <a href=”http://www.mlive.com/news/detroit/index.ssf/2011/11/detroit_city_council_president_5.html”>Pugh told MLive.</a> “We don’t need it. We’re working on a plan.”

  • State Sen. Bert Johnson, D-Detroit

    In an <a href=”http://www.mlive.com/opinion/index.ssf/2012/09/michigan_decides_2012_guest_co.html”>editorial written in Sept. 2012 for MLive.com</a>, Sen. Bert Johnson urged Michiganders to vote “no” on the referendum over PA 4, the emergency manager law.

    “The presence of an EM eliminates, for the duration of the appointment, the rights of voters to elect local officials and displaces them at the time of the appointment. Governments occupied by an EM are inevitably subject to new costs and expenses, forced upon them by the state, without access to new revenue.

    Simply put, EMs are undemocratic individuals who can singlehandedly craft new laws and operate as an unfunded mandate on local government. PA 4 is unconstitutional and a slap in the face to our Founding Fathers.”

  • L. Brooks Patterson, Oakland County Executive

    At a Detroit Economic Club panel held during the 2013 NAIAS that included southeast Michigan’s four most prominent political leaders, L Brooks Patterson told the crowd that an EM in Detroit was needed to start “kicking ass and taking names.”

    He also said that <a href=”http://www.mlive.com/news/detroit/index.ssf/2013/01/l_brooks_patterson_emergency_m.html”>an EM was preferable</a> to the city going through bankruptcy.

    “You don’t want to go through bankruptcy,” Patterson said, according to MLive. “You’re going to get some judge in Atlanta or somewhere who knows nothing about the region calling the shots.”

  • Jo Ann Watson, Detroit City Councilmember

    In a <a href=”http://www.detroitmi.gov/CityCouncil/CouncilMemberJoAnnWatson/NewsReleasesandStatements.aspx”>Jan. 2012 letter authored by Watson</a>, who has vigorously opposed the appointment of an EM, she offered many suggestions for lowering Detroit’s debt. They included a bailout, renegotiating debt service payments and demanding that banks be held legally and fiscally responsible for issuing subprime mortgages that contributed to foreclosures in the city.

    “Public Act 4 joins the infamous litany of racist, repressive, right-wing, undemocratic policies that challenge the very framework of the Constitution of the United States,” she wrote.

  • Wayne County Sheriff Benny Napoleon

    Napoleon has formed an exploratory committee in regards to running for mayor of Detroit in 2013, but has not formally declared his candidacy. He issued a statement following the review team’s findings, which included this text.

    “The worst kept secret in Detroit has been that the financial review team would likely come back with a report that recommends that an emergency financial manager be appointed here in Detroit.

    “I firmly believe that each and every community has a right to elect local leadership to address that community’s problem and I campaigned to repeal Public Act 4 with that belief,” he said.

    “That said, it is incumbent upon the local officials to recognize that there is a problem; how dire that problem is; and to make the tough decisions to address them. We have not done that here in Detroit, which is why we are having this conversation today.”

  • Gary Brown, Detroit City Council President Pro Tem

    Brown issued a written statement following the review team’s findings. In part, he said the pace of change in Detroit<a href=”http://www.huffingtonpost.com/2013/02/19/detroit-financial-emergency-state-review-team_n_2719112.html”> has been too slow.</a>

    “The political will has often not been there to make the necessary and bold fiscal reforms.. Without a doubt, we need the support and accountability that a State of Michigan partnership offers. We cannot address our legacy obligations alone. And, as Detroit goes, so goes Michigan.”