(Updates with comments from treasurer’s office in final paragraph.)
Feb. 2 (Bloomberg) -- Detroit Mayor Dave Bing and unions representing a majority of city employees reached a tentative deal on concessions aimed at avoiding a state takeover of Michigan’s largest city.
“This tentative agreement is the first meaningful step in achieving the necessary concessions and structural changes to resolve the city’s financial crisis,” Bing, 68, said in a joint statement with the unions. “The tentative agreement we’ve reached is not just about concessions. It’s about how labor and management can work together in a fair and constructive way.
“The agreement provides checks and balances that hold both unions and my administration accountable,” he said.
The statement didn’t specify the amount of savings from the deal. The city of 714,000 faces a projected $200 million deficit for the fiscal year ending June 30 and needs to erase that gap to persuade Republican Governor Rick Snyder to call off a financial review of the city. The agreement didn’t include police and firefighter unions, which have resisted a 10 percent wage cut.
Bing, a Democrat, has proposed steps that would save $360 million through June of next year. He plans to fire 1,000 employees to shave costs.
Neither Joe Duncan, president of the Detroit Police Officers Association, nor Daniel McNamara, president of the Detroit Fire Fighters Association, returned calls.
The accord would lower wages 10 percent across the board, cut pension and health-care benefits and create an early retirement program, according to the Detroit News. Employees would recoup as much as 2.5 percent if the city has a surplus through fiscal year 2014.
The deal covers about 6,500 of the city’s 11,000 employees, said Al Garrett, president of AFSCME Council 25.
“It means we can all get back to work with a renewed sense of mission to continue to provide the residents of Detroit with the services they expect,” said Joe Valenti, president of Teamsters Local 214, in the joint statement. Valenti was co- chairman of the coalition of unions that struck the agreement.
The city and unions must agree to concessions early this month to avoid state action, such as the appointment of an emergency manager with powers to cut spending, said state Treasurer Andy Dillon.
Dillon is leading a review of city finances, after a preliminary study found the city will run out of cash by May and has at least $12 billion in debt it has difficulty repaying.
The best option for the city is to develop its own plan to ease financial stress, said Terry Stanton, a spokesman for Dillon.
Any solvency plan must provide essential services to protect residents, maintain reliable bus service and keep streets lit, Stanton said.
--Editors: Mark Tannenbaum, Mark Schoifet
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