Bloomberg News

Pontiac's Workforce Is Cut 86% as Michigan Makes City Obsolete

November 28, 2012

Pontiac's Workforce Falls to 70 From 400

Picketers walk an informational picket line set up near the Waterford Township offices regarding a proposal to combine Waterford Fire Department with Pontiac's fire department, in this Tuesday Dec. 6, 2011 file photo. Photographer: Tim Thompson/The Oakland Press via AP Photo

In five years Pontiac, Michigan, has seen its workforce slashed to 76 from about 570, its police and fire departments handed to surrounding communities and contractors hired for services such as building inspections and cemetery maintenance.

State-appointed emergency managers are making traditional government obsolete in a city of 59,000 where Pontiac cars once were made, professional football and basketball were played and where tax revenue fell 40 percent in the past four years.

Plagued by deficits and under state control since 2009, Pontiac’s situation has prompted a debate over whether a city is defined by its government and workers. To opponents of state intervention, it’s where democracy died and a civic identity was stolen.

“City Hall is like a ghost town,” said Ken Corr, 62, a lifelong resident and poet laureate of the town 15 miles (24 kilometers) north of Detroit. “We used to come here to pay our water bills, pay utility bills. It was a place you could count on seeing people you hadn’t seen for a time.

‘‘It’s just a different community than we’ve known.”

Across America, states such as Ohio, New Jersey and Michigan have pushed school districts and local governments, each with its own officials and budgets, to share services and consolidate for the sake of efficiency and cost. Michigan alone has 533 cities and villages, 1,240 townships and 83 counties, said Samantha Harkins, director of state affairs for the Michigan Municipal League.

Existential Dilemma

Paul Tait, executive director of the Southeast Michigan Council of Governments, said they must cooperate to survive, and that Pontiac has gone further than any city in the state.

“You reach a point where to continue as a government entity, you have to go to that next level to maintain core services,” Tait said.

Many voters aren’t happy with that level.

Pontiac’s diminishment happened thanks to a 2011 law known as Public Act 4 that let emergency managers fire people, sell assets and cancel union contracts. It was one of five cities under state control when voters repealed the law Nov. 6 amid a union-led campaign that called it undemocratic and meant to destroy them. Since then, the state’s weaker, 1990 emergency manager law has also been challenged in court.

Louis Schimmel, 75, is Pontiac’s third emergency manager, a retired municipal-bond adviser who’s helped three other Michigan cities regain financial footing. He was appointed in September 2011 by Republican Governor Rick Snyder to run Pontiac, with a $150,000 salary.

Selling Pontiac

Schimmel this year sold the city’s sewage-treatment system to surrounding Oakland County for $55 million. He used $32.2 million to pay off debt and the rest to balance this year’s budget. Still, the city faces a $6 million deficit next year, Schimmel said.

In the past 18 months, Schimmel and his predecessor, Michael Stampfler, disbanded Pontiac’s police and fire departments and contracted with the Oakland County Sheriff’s Department and neighboring Waterford Township’s fire department for protection. Both hired Pontiac’s police officers and firefighters, and both operate out of facilities in the city.

Pontiac is saving about $5 million a year, Schimmel said.

“I’m trying to show this for the rich cities as well as the poor cities,” Schimmel said. “It makes no sense to have 28 police departments in the county. One works just fine. It works better than all these ragtag ones.”

Yet in November, Pontiac voters rejected the emergency manager law by a 3-1 ratio.

Identity Crisis

Emergency managers create a “horrible” loss of self- governance, said Steve Manning, 69, a former Pontiac community- development director and chief of staff to a previous mayor.

“You call City Hall with a question, and it’s rare that you get a human voice,” he said in an interview in downtown Pontiac.

Manning said the city failed to cut a bloated workforce after General Motors Co. (GM:US) began closing plants. Yet the city could have resolved its deficit alone, he said.

“I don’t think what took 40 years to create you can fix in 18 months,” Manning said.

Manning echoed a common complaint: Pontiac’s first emergency manager, Ed Leeb, in 2009 sold the vacant Silverdome stadium for $583,000, a fraction of the $56 million spent to build the former home of the Detroit Lions National Football League team, where Super Bowl XVI was held in 1982.

Plans for a casino or professional soccer team in the stadium fell through.

“Their philosophy is come in, sell all the jewels to pay the bills, and next year those bills come up and we’ve got nothing left to sell,” Manning said of emergency managers.

‘Martial Law’

City Councilwoman Mary Pietila said the state takeover usurps Pontiac voters’ rights.

“We’re still under martial law,” she said. “They still have taken the rights of the voters away, because we have no say.”

Supporters say the takeover has brought demonstrably good results.

Police response time dropped to under 10 minutes from 76 after the department was dissolved, said Oakland County Undersheriff Mike McCabe. The county hired 63 former Pontiac officers and added 11 deputies to patrol the city, McCabe said.

Savings result from cheaper benefits packages. Former Pontiac officers got pay raises when they transferred to the sheriff’s department, but their benefits were 64 percent of wages compared with 114 percent before, McCabe said.

Of Pontiac’s 58 firefighters, 43 were rehired, said Waterford Deputy Fire Chief Jeff Finkbeiner.

Diminished Mayor

“A lot of people, as their budgets get tighter and they start having more problems, are going to look to what has happened in Pontiac as a possible road map,” said Mayor Leon Jukowski. Under emergency management, he kept his title but lost his authority. He works as a consultant to Schimmel for $50,000 a year, half his mayoral pay.

The loss of manufacturing began Pontiac’s decline. In the late 1960s, General Motors factories there employed almost 37,000, according to company documents. An assembly plant for Pontiac cars closed in 1988 and, in 2009, a truck plant was shuttered.

There remains a GM metal-stamping facility with about 350 workers, and a research center with some 3,000. In 2009, amid the auto industry’s financial crisis, GM decided to end the Pontiac line, which had existed since 1926.

“I never thought I’d see a day when a Pontiac wasn’t made in Pontiac,” said Manning, the former city official.

Schimmel said the reduced Pontiac should be a model.

“I’m trying to be the example for all of Michigan, for any municipality anywhere,” he said. “Before you put your hand out and ask for more money to continue to subsidize a totally mismanaged town, you need to clean up your own act first.”

To contact the reporter on this story: Chris Christoff in Lansing, MI cchristoff@bloomberg.net.

To contact the editor responsible for this story: Steve Merelman at


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