TCS Daily


Dr. Detroit

By Josh Hendrickson - April 17, 2006 12:00 AM

The strain on Detroit's budget has caused many in the city to rethink the role of government. If the city is successful in its reforms, however, it could become a model for reducing bloated budgets across the country.

Detroit Mayor Kwame Kilpatrick has never been known as a government reformer. In fact, he is probably best known for earning a distinction as one of the country's worst mayors by Time magazine. One reason for this dubious honor was his use of city funds to lease a Lincoln Navigator for his wife at the price of nearly $25,000. Rap mogul Russell Simmons even dubbed him the "hip-hop mayor," which sparked disapproval among Detroit's decidedly un-hip-hop suburbanites. Despite his faults, Kilpatrick won re-election in 2005.

Now he has become serious about balancing the city budget. The task has required him to rethink the role of government, and to decide which programs and services are worth the city's money. In timelessly non-bureaucratic fashion, he has worked fervently to reduce the size of city government and to open the door to privatization of city services.

Since taking office, Kilpatrick has eliminated 5,500 government jobs, which cut payroll by $272 million. To start with, benefits to city employees had simply become too much. According to the Detroit News, the city's liability for employee benefits is at "a rate three-times of the private-sector average".

On April 12, Mayor Kilpatrick announced plans to cut property taxes and charge a fee for garbage pick-up. Kilpatrick seeks to reduce what he calls a "$75 million subsidy" for trash pickup. Such language speaks volumes about Kilpatrick's newfound attitude towards government. Rather than referring to trash pick-up as a government service, he has instead viewed it as a subsidy. Many believe that this may be the first step towards privatization.

Privatization has thus become the talk of the local business community in Detroit. Mayor Kilpatrick is considering outsourcing management or even selling the Department of Public Lighting to a private company.

"We are not a power company," said Kilpatrick, quoted in the Detroit News. "If we are, we're a terrible one. We don't need to be in the power business." Such comments are seldom heard within the halls of any city hall, much less that of Motown.

The talk of privatization is not just rhetoric. The mayor has spoken several times about the need to outsource the management of the local zoo and museums to private companies. The most recent budget calls for private companies to take over the Recreation facilities used to keep kids off the streets. He also pointed to the changes made to the city's snow removal service:

"You need a core team of people in city government to do snow removal. But you don't need these 92 or 98 people on your staff all the time. Why? Because it's not snowing right now. So we reduced the department and brought in contractors when it snows."

This transition by the city of Detroit is remarkable. While most city governments bloat their budgets in good economic times and then threaten to raise taxes or cut the police force during a recession, the City of Detroit has gone a different route. The shrinking tax base (due to a protracted economic exodus) has prevented the city from disguising municipal failures resulting from a poor economy, and has forced officials to question the proper role of government.

It seems Detroit Mayor Kwame Kilpatrick has realized the hard way that the government should not be in the business of supplying certain services, especially those that are administered poorly by the city. While at one time he seemed like an unlikely candidate, Kilpatrick is now leading the charge to fashion a smaller, more effective city government. If done properly, the reforms in Detroit could provide a blueprint for other economically ailing cities across the rustbelt and beyond.

Josh Hendrickson maintains The Everyday Economist.

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6 Comments

Good ideas
What a refreshing story. Government workers at all levels are almost impossible to remove regardless of their performance. Their benefits cost is disproportionately high when compared to the private sector. Kudos to Dr. Detroit.

OCP
Let's hope they avoid the outsourcing problems portrayed in RoboCop.

Kudos to the mayor and people of Detroit. Too bad cities states and counties have to wait until near bankruptcy to do the right thing.

No Subject
"Too bad cities states and counties have to wait until near bankruptcy to do the right thing."

Yeah, its called 'Starve The Beast'. It's the reason why Bush and Reagan jack up the national debt...to force future congresses and administrations to do what Detroit has to do now. In fact, it is the only way to get them to do it.

It's about time!
Now we can all hope it works and other cities and towns follow the model.

Huh?
You have got to be kidding me. Josh, are you from Detroit? do you even know whats going on here? The Zoo, and historical society almost closed perminently if it werent for local citizens and groups that proped them up. Kwame the destroyer (as we locals call him) also closed the oldest aquarium in North America! The man is a total disaster to Detroit. The only reason he is doing the things he is doing now is because he has no choice in the matter. The population is dwindling, the people that are left pay no taxes - property or otherwise. Every other building is bulldozed instead of rehabed. He even razed the Motown Records building recently to make way for a parking lot for the Superbowl! So much for Detroit's history. If you want an insiders view. visit: www.detroitfunk.com, www.detroitblog.com, www.sof8mile.blogspot.com/ Predictions are that once the trash pickup changes go into place, there will be trash everywhere. Hell, there already is!

You are correct
but what are the options? Borrow more and more money to try to prop up the budget as spending spirals out of control. I know taxes the businesses to a point that they all leave. That would help.

I would have been sorry to see the zoo go, but I wasn't willing to cut them a check to keep it open. What does that tell you?

I completely agree that Kwame is a pathetic mayor, but reducing the role of the city government is a good thing.

If the trends continue, Detroit will not be the largest city in Michigan for long.

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