TOM WALSH: Spendthrift Detroit may follow China
- TOM WALSH: Spendthrift Detroit may follow China
January 28, 2005
BY TOM WALSH
FREE PRESS COLUMNIST
When I visited China 15 years ago, I snapped a picture at the Beijing
Jeep plant of a sign with one of those perplexing slogans at Chinese
workplaces: "Time Is Money; Efficiency Is Life."
Problem was, there was nothing remotely efficient then about Beijing
Jeep, the government-controlled joint venture with Chrysler Corp.
Thousands of employees sat around with little or no work to do.
China's economy was in a slump a year after the Tiananmen Square
crackdown on dissidents crippled its tourism industry and crimped
foreign investment. The communist government gave millions of citizens
make-work jobs to keep them off the streets.
It's eerie, but looking at Detroit's growing fiscal crisis reminds me of
the old Soviet Union and pre-boom China.
City keeps bloated payroll
Government institutions are by far the city's largest employers, led by
Detroit Public Schools with 23,000 employees and the City of Detroit
with about 18,000. Three of the top 10 employers are big nonprofit
health systems -- Detroit Medical Center, Henry Ford and St. John --
that derive much of their revenues from federal Medicare and Medicaid
payments. Three more are other public entities: the U.S. government,
Wayne State University and the State of Michigan.
Only two private-sector companies, DaimlerChrysler AG's Chrysler Group
and General Motors Corp., are among the city's top 10 employers: Nos. 5
and 7, respectively, with slightly more than 10,000 and 6,000 workers in
While many of Detroit's public servants are undoubtedly good workers,
data gathered for the recent Detroit Economic Forum show the city's
payrolls are wildly bloated in several areas compared with other major
Sean Werdlow, Detroit's chief financial officer, and Mayor Kwame
Kilpatrick presented these sobering facts Wednesday to the Detroit
Renaissance group of corporate CEOs.
Detroit's annual spending for police, about $377 per capita, is double
the amount spent per citizen in Dallas, Indianapolis, Houston or San
Jose, Calif., and about 50 percent more than the $259 per capita in Los
Administrative costs are tops
What's utterly unfathomable is why the administrative costs of running
Detroit's government are the highest in the nation -- by a long shot.
Detroit's annual administrative costs are $223 per capita compared with
$128 for New York, $55 for Chicago, $79 for Phoenix and $48 for Houston.
Even more mind-boggling, given Detroit's looming $230-million budget
deficit, was Thursday's report in the Free Press that the City Council
is seeking a 4-percent increase in its $17-million budget.
City Council members have jacked up their own budget by 48 percent since
2000 and boosted the size of their full-time staff from 92 to 108.
No wonder Detroit's administrative costs have ballooned when the
administrators in charge of the purse strings pad their own payroll.
City Council members aren't the only ones who need to wake up and smell
the impending disaster. Kilpatrick, too, must lead by showing that the
mayor's office is shrinking its staff, not just trimming the pay of
appointees by 10 percent.
To return to the communist country analogy, it seems Detroit leaders
have two options:
They can go the route of the old Soviet empire, plodding along as if the
world hasn't changed, and watch their world implode. Or they can take
heart from China's approach in the last decade, partnering with private
companies to become more efficient and adopting policies to spur
Contact TOM WALSH at 313-223-4430 or twalsh@....
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