Commentary: Bringing cities back | Michigan Radio
The other day I got a note from Fred Leeb, who spent a little over a year as Emergency Financial Manager in Pontiac until the middle of 2010. He started thinking a lot about this problem when he was running Pontiac. Leeb was a natural choice for the job; he was a recognized expert in turning troubled nonprofit businesses around. While he was in Pontiac, he managed to balance the budget and lead the city to an upgraded bond rating.
Eventually, he got tired of fighting with local politicians, and returned to the private sector. But while in Pontiac, he had a dream he never got to see become reality.
He wanted to see the government turn Oakland County’s capital city into a demonstration laboratory. He had this vision of bringing a hundred of the nation’s top turnaround experts to Pontiac, and giving them a ten-year assignment to reinvent the economy.
Leeb called his concept BIG -- for Business Innovation and Growth. He never did manage to interest the government in his program. But he’s been thinking about this ever since.
He’s now concluded that it would be virtually impossible to bring enough taxpaying new businesses and residents to any troubled city, if you focus on getting them one at a time.
There will always be too many better options -- especially since cities like Detroit and Pontiac cannot provide the kind of services and retail shopping upscale residents are going to want.
The chicken-and-egg dilemma is that they can’t provide quality of life services until they get enough residents who can pay for them -- but the residents are unlikely to come unless the services are already there.
Since leaving the pressure of running Pontiac day-to-day, Fred Leeb has been doing more research and is more convinced than ever that he is on to something. He notes that Quicken Loans’ Dan Gilbert moved nearly 2,000 employees to Detroit to help build the critical mass needed to revitalize downtown.
On a smaller scale, Cornell University and Technion, an Israeli technological institute, are plunging hundreds of millions into an attempt to transform a section of New York City’s Roosevelt Island. Mayor Michael Bloomberg believes this may generate up to $23-billion in economic activity over the next thirty years.
The other day, Leeb noted approvingly, former NBC news anchor Tom Brokaw joined those saying that what’s needed is a national jobs program, one on the scale of the Marshall plan that helped rebuild Europe after World War II.
Fred Leeb hopes that if President Obama is reelected, he will turn his attention to such a plan, possibly with the money saved from winding down the wars in the Middle East.
There are those who say that given the deficit, America can’t possibly afford to do anything like a huge jobs program. Leeb is anything but a spendthrift. But when he looks at Pontiac or Detroit, he thinks that the real question may be: How can we afford not to?
Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.
Tuesday, September 18, 2012
Saturday, September 15, 2012
Fiscal stress continues for hundreds of Michigan jurisdictions, but conditions trend in positive direction overall (mpps-fiscal-health-2012.pdf (application/pdf Object))
mpps-fiscal-health-2012.pdf (application/pdf Object)
The Center for Local, State, and Urban Policy
Gerald R. Ford School of Public Policy, University of Michigan
Michigan Public Policy Survey September 2012
"For the first time since the MPPS began in 2009, fewer than half of local leaders expect their jurisdiction will be less able to meet its fiscal needs next year, as compared to this year. This may reflect a “new normal,” based on cuts in services and staffing that have been made by local governments over the last few years, thereby allowing them to get by with fewer resources.
Still, the overall improvement masks ongoing fiscal distress for hundreds of jurisdictions, for which the worst may be yet to come. Further, even for those jurisdictions that may have turned the corner toward better times, other factors on the horizon could send them back on a negative path. In recent months, for instance, the U.S. economy appears to have been slowing once again, and should this continue or worsen, it could be expected that local governments would quickly experience negative effects.
In addition, state policymakers in Lansing are expected to re-start efforts to reform the Personal Property Tax, another significant source of funding for local governments. Any significant cuts in revenue from this source could also potentially threaten the nascent improvement in fiscal health for local governments statewide.
While conditions appear to be improving overall, there is no doubt this is still a challenging time for local government in Michigan."
The Center for Local, State, and Urban Policy
Gerald R. Ford School of Public Policy, University of Michigan
Michigan Public Policy Survey September 2012
"For the first time since the MPPS began in 2009, fewer than half of local leaders expect their jurisdiction will be less able to meet its fiscal needs next year, as compared to this year. This may reflect a “new normal,” based on cuts in services and staffing that have been made by local governments over the last few years, thereby allowing them to get by with fewer resources.
Still, the overall improvement masks ongoing fiscal distress for hundreds of jurisdictions, for which the worst may be yet to come. Further, even for those jurisdictions that may have turned the corner toward better times, other factors on the horizon could send them back on a negative path. In recent months, for instance, the U.S. economy appears to have been slowing once again, and should this continue or worsen, it could be expected that local governments would quickly experience negative effects.
In addition, state policymakers in Lansing are expected to re-start efforts to reform the Personal Property Tax, another significant source of funding for local governments. Any significant cuts in revenue from this source could also potentially threaten the nascent improvement in fiscal health for local governments statewide.
While conditions appear to be improving overall, there is no doubt this is still a challenging time for local government in Michigan."
Sunday, August 26, 2012
Support For Emergency Manager Law - AM 1590 WTVB The Voice of Branch County
Support For Emergency Manager Law - AM 1590 WTVB The Voice of Branch County
News
Support For Emergency Manager Law
Saturday, August 25, 2012 6:54 a.m. EDT
Filling out a survey
(DETROIT) - A new survey shows that Michigan voters support the state's emergency manager law. According to a survey conducted by Detroit television station WDIV and the Detroit News, 53% of Michigan voters support keeping the law while just 33% do not. The emergency manager law, Public Act 4, allows Governor Rick Snyder the ability to intervene with financially strapped cities and appoint an emergency manager with the power to break collective bargaining agreements, fire elected officials and privatize or sell public assets.
OTHER VOICES: Time to reinvest in nonprofit leadership | Crain's Detroit Business
OTHER VOICES: Time to reinvest in nonprofit leadership | Crain's Detroit Business
August 26, 2012 8:00 PM
OTHER VOICES: Time to reinvest in nonprofit leadership
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We often refer to the bedrock beneath Detroit as the foundation for what has been built here. I suggest that in addition to the geological bedrock, Detroit is supported by a foundation of nonprofit cultural, business development and human service organizations that collectively are just as substantial -- and maybe even more important to the structure and stability of our city.
As strong as this foundation has been historically, it is time to reinforce it, or we risk its instability at a time when there is still so much to be accomplished.
Like the minerals and compounds that make up the ground we stand on, the nonprofits of our community are also formed with key ingredients. The most important is the partnership between the professional and volunteer leaders -- from entrepreneurs and philanthropists to executive officers of our region's most important companies. Serving in a top position in any of these organizations has always been rewarding and sometimes challenging, especially so during this difficult economic period.
These pressures make it even more difficult to balance the responsibilities of management and the board of directors. These lines need to be clear, especially when dealing with "bet the house" issues. If the professional and volunteer leaders of a nonprofit don't know where their responsibilities begin and end, the stability of their organizations could erode.
The leaders are passionate about their cause and are committed, but unfortunately boundless passion doesn't pay the bills. The constant struggle of mission vs. margin is a potential battleground for volunteer and professional leadership. Professional leadership often assumes a responsibility for accomplishing the mission, at all costs, while boards find the need to establish boundaries and limits. This partnership can work only if all parties have a sense of empathy, drive from a perspective of stewardship and consistent critical thinking.
We've all been through a rough period, and we must now reinvest in these relationships and further develop a collective vision.
Boards of directors should honestly assess their effectiveness. They should review the nature and tone of board communication to assure the board is being provided information with maximum transparency. Foster an atmosphere of collaboration in the boardroom, where leaders can openly and respectfully debate issues.
Nonprofit leaders should establish an executive compensation committee so there will be consensus on objectives for measuring performance.
Finally, let's undertake a mission evaluation to assure that the energy expended is properly focused on our region's most critical needs.
The intensity of the environment has strained us all, and it's a good time to practice empathy, recommit to stewardship and clear our minds for the next round of critical thinking.
Mark Davidoff is Michigan managing partner at Deloitte LLP.
As strong as this foundation has been historically, it is time to reinforce it, or we risk its instability at a time when there is still so much to be accomplished.
Like the minerals and compounds that make up the ground we stand on, the nonprofits of our community are also formed with key ingredients. The most important is the partnership between the professional and volunteer leaders -- from entrepreneurs and philanthropists to executive officers of our region's most important companies. Serving in a top position in any of these organizations has always been rewarding and sometimes challenging, especially so during this difficult economic period.
These pressures make it even more difficult to balance the responsibilities of management and the board of directors. These lines need to be clear, especially when dealing with "bet the house" issues. If the professional and volunteer leaders of a nonprofit don't know where their responsibilities begin and end, the stability of their organizations could erode.
The leaders are passionate about their cause and are committed, but unfortunately boundless passion doesn't pay the bills. The constant struggle of mission vs. margin is a potential battleground for volunteer and professional leadership. Professional leadership often assumes a responsibility for accomplishing the mission, at all costs, while boards find the need to establish boundaries and limits. This partnership can work only if all parties have a sense of empathy, drive from a perspective of stewardship and consistent critical thinking.
We've all been through a rough period, and we must now reinvest in these relationships and further develop a collective vision.
Boards of directors should honestly assess their effectiveness. They should review the nature and tone of board communication to assure the board is being provided information with maximum transparency. Foster an atmosphere of collaboration in the boardroom, where leaders can openly and respectfully debate issues.
Nonprofit leaders should establish an executive compensation committee so there will be consensus on objectives for measuring performance.
Finally, let's undertake a mission evaluation to assure that the energy expended is properly focused on our region's most critical needs.
The intensity of the environment has strained us all, and it's a good time to practice empathy, recommit to stewardship and clear our minds for the next round of critical thinking.
Mark Davidoff is Michigan managing partner at Deloitte LLP.
Wednesday, August 8, 2012
Taming the OPEB Beast
Taming the OPEB Beast
Originally posted by Charles Chieppo on 8/8/12
In "California's Neglected Promise," author Adam Tatum estimates that the besieged Golden State is facing more than $62 billion in unfunded liabilities for "other post-employment benefits" (OPEB), which mostly consist of health-care costs for retired public workers.
California's OPEB burden is just a small part of the picture. In 2004, the Governmental Accounting Standards Board (GASB) announced that beginning in 2008 cities and states would be required to calculate and make public their OPEB liabilities. Now, one estimate puts unfunded state and local OPEB liabilities at more than $2 trillion, while a survey of 126 state and local pension plans (representing 85 percent of public-pension assets) found unfunded pension liabilities of roughly $700 billion — and that was two years ago.
While many of us would like to change the way public pensions work, those systems do deduct money from current employee salaries to fund at least a portion of future costs. OPEB expenses, on the other hand, are generally funded on a pay-as-you-go basis from operating budgets.
Originally posted by Charles Chieppo on 8/8/12
In "California's Neglected Promise," author Adam Tatum estimates that the besieged Golden State is facing more than $62 billion in unfunded liabilities for "other post-employment benefits" (OPEB), which mostly consist of health-care costs for retired public workers.
California's OPEB burden is just a small part of the picture. In 2004, the Governmental Accounting Standards Board (GASB) announced that beginning in 2008 cities and states would be required to calculate and make public their OPEB liabilities. Now, one estimate puts unfunded state and local OPEB liabilities at more than $2 trillion, while a survey of 126 state and local pension plans (representing 85 percent of public-pension assets) found unfunded pension liabilities of roughly $700 billion — and that was two years ago.
While many of us would like to change the way public pensions work, those systems do deduct money from current employee salaries to fund at least a portion of future costs. OPEB expenses, on the other hand, are generally funded on a pay-as-you-go basis from operating budgets.
Monday, August 6, 2012
Capitol Weekly: City bankruptcies target retirees' health costs
Capitol Weekly: City bankruptcies target retirees' health costs
The cost of retiree health care promised state and local government employees, growing at a faster pace than more-publicized public pensions, has become a common target for cuts in a string of California city bankruptcies.
San Bernardino, which filed for bankruptcy last week, lists a $2.2 million savings from a deferred retiree health payment in a three-month fiscal emergency plan said to be needed to allow the city to make payroll.
In a lengthy bankruptcy that began in May 2008 and ended last November, Vallejo cut monthly retiree health care payments to $300 from as much as $1,500, saving an estimated $100 million over time.
Stockton, in a June bankruptcy, would end all retiree health care payments, citing overly generous and costly benefits: immediate eligibility, uncapped payments, less than half of retirees covered, and a cost equal to 31 percent of payroll for proper pre-funding.
Unlike pensions, there is no widely held view that promised retiree health care is a “vested right,” protected by contract law, under a long series of court decisions. Some think promised retiree health care can be cut, depending on circumstances.
City bankruptcies target retirees' health costs
By Ed Mendel | 08/06/12 1:00 AM PST
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San Bernardino, which filed for bankruptcy last week, lists a $2.2 million savings from a deferred retiree health payment in a three-month fiscal emergency plan said to be needed to allow the city to make payroll.
In a lengthy bankruptcy that began in May 2008 and ended last November, Vallejo cut monthly retiree health care payments to $300 from as much as $1,500, saving an estimated $100 million over time.
Stockton, in a June bankruptcy, would end all retiree health care payments, citing overly generous and costly benefits: immediate eligibility, uncapped payments, less than half of retirees covered, and a cost equal to 31 percent of payroll for proper pre-funding.
Unlike pensions, there is no widely held view that promised retiree health care is a “vested right,” protected by contract law, under a long series of court decisions. Some think promised retiree health care can be cut, depending on circumstances.
NY state officials eye automatic control boards | Reuters
NY state officials eye automatic control boards | Reuters
By Joan Gralla
The latest discussion of control boards in New York follows a report last week by DiNapoli that noted eight municipalities were so close to hitting the maximum level of property tax allowed by the state that they were at risk of losing state aid.
The concepts that policy makers now are analyzing would sidestep the political process by devising a list of fiscal indicators, according to the source, who requested anonymity. If a municipality was in the danger zone on a minimum number of them, an advisory board might be created, or the localities' finances might be handed over to a control board.
Tests might include whether the fund balance was in deficit, whether reserves had been exhausted, or whether the municipality had exceeded the maximum property tax level.
Some policy makers are concerned that automatically creating a control board to run a localities' finances would give the state too much power, the source said.
By Joan Gralla
The latest discussion of control boards in New York follows a report last week by DiNapoli that noted eight municipalities were so close to hitting the maximum level of property tax allowed by the state that they were at risk of losing state aid.
The concepts that policy makers now are analyzing would sidestep the political process by devising a list of fiscal indicators, according to the source, who requested anonymity. If a municipality was in the danger zone on a minimum number of them, an advisory board might be created, or the localities' finances might be handed over to a control board.
Tests might include whether the fund balance was in deficit, whether reserves had been exhausted, or whether the municipality had exceeded the maximum property tax level.
Some policy makers are concerned that automatically creating a control board to run a localities' finances would give the state too much power, the source said.
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