Banks, state take control of Detroit?By Diane Bukowski Contributing Writer | Last updated: May 1, 2012 - 12:37:26 PM
The council voted on the 44th anniversary of the assassination of Dr. Martin Luther King, Jr. Many in the audience accused the “Fatal Five” of assassinating Detroit, the largest Black-majority city in the world outside of Africa, as well.
“This city is the home of the Shrine of the Black Madonna, the home of labor, of (late City Council President) Erma Henderson, (late Mayor) Coleman A. Young, and Reparations Ray Jenkins,” said Councilwoman JoAnn Watson, who has led the fight against Public Act 4.
“There is no cash infusion from the state in this agreement, and you are ignoring its union-busting. We should be demanding that the governor pay us the $220 million he owes us. Who gives away their own power to the forces of evil? This is unconstitutional and an assault on our citizens.”
State appointees will override city’s elected officials
Under the agreement’s terms, Gov. Rick Snyder, Treasurer Andy Dillon, a nine-member state-appointed “Financial Advisory Board,” a Chief Financial Officer and a Program Management Director, both approved by the state, can overrule the city’s elected officials on matters including disposition of assets, budgeting, debt accrual, privatization, regionalization, and union contracts.
“The Detroit City Council’s vote tonight represents a pivotal moment in Detroit’s history,” said Mr. Lewis in a statement. “The Mayor and his administration worked with the City Council and the State to develop a consent agreement that we believe puts us on track to restructure our City financially ... This agreement also ensures that the future of Detroit is determined by Detroiters and its elected officials.”
Mr. Lewis and attorney Michael McGee appeared together at the council table to discuss the agreement. Mr. McGee is a co-author of Public Act 4, also known as “the Dictator Act.” City officials claimed to be staving off the appointment of an emergency manager with the consent agreement.
PA4 has been applied only to Michigan’s majority-Black cities. It has been condemned by the Democratic Caucus of the U.S. House Judiciary Committee as unconstitutional and a violation of the nation’s Voting Rights Act.
Wall Street rules
Wall Street’s dominant role in the agreement is clear. The agreement cannot be terminated until Detroit is deficit-free for three years, receives one of four of the highest bond ratings from Wall Street agencies, or at the say-so of State Treasurer Andy Dillon and/or the Financial Advisory Board. Since it cites other state laws in addition to Public Act 4, it is debatable whether the pending certification of over 240,000 signatures for a state-wide referendum vote against PA4 will nullify it.
In addition to Ms. Watson, Council members Kwame Kenyatta, Brenda Jones and Andre Spivey voted NO. The “Fatal Five” who voted for the agreement were Council President Charles Pugh, President Pro-Tem Gary Brown, James Tate, Saunteel Jenkins and Kenneth Cockrel, Jr.
Afterwards, Mr. Brown told the media, “The silent majority of Detroit has spoken.”
Prominent Detroiters demanded NO vote
Through four days of deliberations, dozens of Detroiters condemned the agreement during public comment.
They included Cardinal Baye Landy of the Black nationalist Shrine of the Black Madonna, U.S. Congressmen John Conyers and Hansen Clarke, Black state legislators, the Rev. Jesse Jackson, Black church pastors, and dozens of union and community leaders.
Representatives of the Moratorium NOW! Coalition against Foreclosures, Evictions and Shut-offs and People Before Banks called on the council to declare a moratorium on the city’s debt to the banks, which amounted to $598 million in the current fiscal year.
Holding up rare photos, historian Paul Lee reminded council members of Detroit’s history in the struggle for Black power and self-determination.
One photo showed Stokely Carmichael (later Kwame Ture of the All-African Peoples Revolutionary Party), and the Rev. Albert Cleage, Jr. (Jaramogi Abebe Agyeman, founder of the Shrine of the Black Madonna) at a campaign rally for Kenneth Cockrel, Sr., father of the current council member.
Attorney Cockrel, Sr. was revered by Detroiters as a member of the League of Revolutionary Black Workers, a foe of the racist police execution unit called “S.T.R.E.S.S.,” and an opponent of the 1980 privatization of Detroit General Hospital.
Schools leader in hoodie: ‘You are killing Detroit’
The 10-member Financial Review Team appointed by Gov. Snyder met earlier that day to hastily approve the agreement.
Former Detroit school board member Marie Thornton, dressed in a hoodie and displaying a package of Skittles and an Arizona Iced Tea can, told the team March 26, “Just as Trayvon Martin was killed, you are killing Detroit.”
The audience that day accused the team of being nothing but a rubber stamp. It drowned out their deliberations and final vote declaring Detroit in a state of “severe financial stress,” singing “We shall overcome,” and repeatedly chanting.
Mr. Lewis told the council April 3 that he, chief operating officer Chris Brown, and council members Pugh, Tate and Cockrel met with state officials to draft the agreement.
Mr. Brown was previously a DTE and Singapore Energy executive. Mr. Lewis was previously CEO of The Bing Group, a failed conglomerate of steel-related businesses which Mayor Bing founded, and a finalist in global accounting firm Ernst & Young’s “Entrepreneur of the Year” competition.
Ernst & Young was brought in by the state to review Detroit’s finances even prior to Gov. Snyder’s imposition of the first steps of Public Act 4. They met with the council in November, in an illegally closed session, and declared that Detroit was about to run out of cash in April. The company is being sued by the states of New York and New Jersey for cooking Lehman Brothers’ books before its historic collapse in 2008.
State threatens to suspend revenue-sharing funds
In addition to the creation of the Financial Advisory Board, the agreement threatens the city with various dire “reform default” provisions if the council and mayor do not agree to abide by decisions of the Financial Advisory Board, Chief Financial Officer and Program Management Director.
These include the suspension of state revenue-sharing payments, refusal to approve debt requests, accelerated collection of any city debts to the state, court action, and finally, the placement of the city in receivership under PA 4.
The agreement purports to maintain the charter powers of the mayor and city council, but says the mayor and council will “restrain their respective exercise of powers, privileges and authorities in certain circumstances as provided in this agreement.”
Agreement busts union contracts; but provides no state funds
The agreement busts three-year union contracts that had already been signed by the city administration and 32 city unions, which would have saved the city up to $130 million. It mandates that numerous anti-union provisions be included in imposed contracts after July 16, 2012.
“AFSCME does not mean ask me and you take over our vote and our contracts,” Phyllis McMillon, president of Local 542 of the American Federation of State, County and Municipal Employees (AFSCME), told the council April 3. “This is nothing but high treason.”
The state provides no money in return. It does not pay back a $220 million state debt to Detroit, or $400 million of non-resident taxes the city was not able to collect under a 1997 tie-barred revenue-sharing package, an issue Councilwoman Watson has raised for several years.
The consent agreement did not even provide a state loan, approved by the council 6-3 the previous week, free and clear.
“The anticipated aggregate size of the refinancing is approximately $137 million, of which approximately $33 million will be used to refinance existing debt, and approximately $104 million will be placed in an escrow account and used to pay for costs of the Reform (down-sizing) Program and for City operating expenses.” the agreement says. “Draws from the escrow account shall be as and when approved by the State Treasurer in the State Treasurer’s discretion.”
U.S. Congressman Hansen Clarke told the council that he and Rep. John Conyers have a bill before the House of Representatives to provide $500 million in federal funding for Detroit, and that it has bi-partisan support, the “Fatal Five” were not impressed.
The agreement provides for a drastic restructuring of Detroit, including:
Public safety—State troopers on Detroit’s streets.
Public Lighting Department—city already buys all of its power from DTE under a $150 million contract; DTE will fully take over PLD.
Department of Transportation: regionalization with only one of 10 board members representing Detroit, which has the area’s largest public transit system.
Shutdown of many services at Detroit Health Department.
Elimination of Human Services Department, which provides emergency food, clothing, and utility assistance and is funded by federal grants.
State control of city real estate.
Planning and Development Department to go to Detroit Economic Growth Corporation, controlled by many private companies.
Long-term liability restructuring, meaning more money for the banks.