Detroit rescue plan eyes new efficiencies

10/9/2009

DETROIT - Detroit's mayor yesterday unveiled a plan to turn around the city's struggling finances that would save between $50 million and $75 million this fiscal year by outsourcing work, consolidating city offices, and closing an aging power plant.

But the report compiled by Mayor Dave Bing's crisis turnaround team also warns that the city's $300 million budget deficit could more than double within two years.

"Without substantial increases in revenue and reductions in cost structure and debt service expenditures, the accumulated deficit would grow to $480 million by the end of the next fiscal year and to $750 million in fiscal year 2011-2012," the report states.

The team of more than 50 hand-picked civic and business leaders spent the past three months developing more than 150 recommendations. Their report, which was released Wednesday, lists 27 items for immediate attention. It suggests the city could save money by outsourcing its payroll duties and management of the Coleman A. Young Municipal Airport; cutting out discretionary spending in the city budget; renegotiating vendor contracts; and restructuring Detroit's immense debt.

"We can understand how the city can't tackle all these things right off the bat," said Joe Walsh, turnaround team co-chair and former Ford Motor Co. executive. "We're hopeful that this report can really help the city move forward on the issues it's going to have to address because of the economic problems the state and the city are facing."

At least one in four working-age adults is unemployed, and auto sector jobs are disappearing. Detroit's home foreclosure rate is among the nation's highest.