Departing EM says Pontiac won't go bankrupt under plan
Schimmel (Charles V. Tines, The Detroit News)
Pontiac — After nearly four years of service cuts, department eliminations, mass layoffs, reductions to retiree health care and sales of city property, Pontiac is in better financial shape but still has much work to do, according to its emergency financial manager.
Pontiac is into its third emergency manager, Louis Schimmel, who is scheduled to leave his job this month but first will present a two-year plan to avoid bankruptcy to citizens at a meeting at 9 a.m. at City Hall.
“There is absolutely no reason for bankruptcy in Pontiac if they take advantage of all that I have done and follow the blueprint I am leaving,” Schimmel said.
Even so, his own report noted that the city of 60,000 residents isn’t considered financially healthy. It’s turned a $3.4 million deficit in 2011-2012 fiscal year into a $575,000 surplus — but that’s still nearly ten times lower than an ideal rainy-day fund.
Elected officials will again oversee the city’s finances after Schimmel’s departure, and he said the city made great changes under him and his predecessors, Michael Stampfler and Fred Leeb.
“The city of Pontiac is now a model city for communities facing financial distress or as a way to operate more efficiently and effectively than the standard governing model,” Schimmel said
Schimmel’s report comes as Detroit is entering its first few months under Emergency Manager Kevyn Orr and could offer clues to what lies ahead:
— Pontiac’s gains have been made at considerable sacrifice and cost both visibly and behind closed doors. Besides selling off city properties like the Silverdome and community centers, it has meant disbanding police and fire departments and contracting out public safety services at a savings of more than $6 million annually.
— Considerable savings have been made by cutting a city workforce of more than 500 workers to 20 full-time employees, saving the cost of pay, pensions and other benefits. More than $650,000 annually was saved by reducing the staff and benefits for elected city council members and the city mayor.
— Cutting city jobs eliminated many city services like inspections of sidewalks and enforcement of illegal dumping and tall grass. That’s impacted the quality of life of the city
— Many savings were realized through one-time cost cutting measures, such as the $55 million sale of excess capacity at the city’s waste water treatment plan.
Pontiac City Councilwoman Mary Pietila said the experience has been mixed.
“Has the city improved?” she asked. “I guess its all in how you look at it.”
“For those who did not want to see any change at all, it’s been a disaster,” she said. “For those who realize that some change is inevitable and must occur, it has improved under them (emergency managers).”
Some changes have improved the quality of life, she said. Contracting police to the Oakland County Sheriff’s Department has improved responses, while the sale of city property has led to exciting redevelopment such as a tennis center and project where classic car owners can house and work on their vehicles.
But the privatization of the department of public works has caused longer waits to repair street lights and roads, said Pietila, who has lived in the city for 33 years.
Retiree health care is the single larges expense facing the city, Schimmel said. With 1,200 retirees, 500 of which are on the city’s self-insured plan, this means the city faces an annual exposure of up to $100 million a year, he said.
“These are people who worked for us and rely on the health insurance,” said Pietila. “It would be a slap in their face to discontinue it.”
From The Detroit News: http://www.detroitnews.com/article/20130617/METRO02/306170016#ixzz2WUwV0va6
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