Detroit city council to discuss wage cuts next week

Reuters News
Posted: Jul 13, 2012 2:31 PM
Detroit city council to discuss wage cuts next week

(Reuters) - Detroit Mayor Dave Bing's bid to save an estimated $102 million for the city's cash-strapped budget by slashing unionized workers' pay and benefits will go before the city council next week.

The plan, which includes a 10 percent wage cut and changes to healthcare coverage, pensions and work rules, was approved on Thursday by an oversight board created under an April financial stability agreement between Detroit and the state of Michigan.

The affirmative vote by the nine-member financial advisory board sends the plan to the Detroit City Council, which has scheduled a committee meeting for Monday. A vote on the plan could come as soon the council's formal session on Tuesday.

If the council does not approve the plan, the city's program management director, a position created under the oversight agreement, would be empowered to implement the plan, according to a spokeswoman for Bing.

In March, Detroit reached tentative deals with some of its 48 labor unions that represent nearly 10,700 workers, but state officials said the $68 million in estimated annual savings were not enough to help the city overcome its fiscal problems.

Officials at some of the city's larger unions could not immediately be reached for comment on Friday.

A population plunge and sinking revenue have left Detroit with a $260 million cumulative budget deficit and a huge $7.9 billion long-term debt burden that includes city bonds, employee pensions and retiree healthcare.

The city's serious fiscal situation led to the financial stability agreement, which gave the state oversight over its finances. The controversial pact has been the target of litigation over its validity.

(Reporting by Karen Pierog; Editing by James Dalgleish)