Saturday, February 5, 2005

Kilpatrick, council agree on pension deal

City will refinance debt to save $277 million over 14 years; mayor to issue no more layoffs this year, freeze spending

By Natalie Y. Moore / The Detroit News

Comment on this story Send this story to a friend Get Home Delivery

DETROIT -- Faced with the prospect of handing pink slips to 2,000 city workers, the Detroit City Council changed its vote on a pension deal Friday after Mayor Kwame Kilpatrick personally appealed to members.

Political theater played out for four hours at the council table as city officials continued to argue their stance of refinancing the $1.2 billion pension debt for $277 million savings over 14 years. The bulk of the savings - $80 million - occur in this fiscal year. Without the approval, 2,000 layoffs would have been necessary, the mayor said.

The four council members who reversed their Wednesday "no" vote did so, they say, in exchange for Kilpatrick issuing no more layoffs for 2004-05 and freezing all non-essential purchases.

"Wasn't the commitment all along this?" asked Council President Pro Tem Kenneth Cockrel Jr., who voted yes both times.

On Wednesday the vote failed 4-4 with Sharon McPhail, Maryann Mahaffey, Barbara-Rose Collins and JoAnn Watson voting no. On Friday, Kilpatrick called a special session and the vote was unanimous.

"Council stepped up today to force the issue. I still think it's (pension bonds) risky. What we did do today was force some agreement," said McPhail, a mayoral candidate.

Last month Kilpatrick announced 686 layoffs in this fiscal year, which ends June 30. He is also seeking union wage concessions and a reduction in city contracts. There is a $231 million shortfall for next year on top of a $94 million deficit from 2003-04 and a $64 million projected deficit for this year.

The council approved a 2004-05 budget last spring that included proceeds from refinancing. Despite the so-called compromise, the mayor never said he would order more layoffs for 2004-05 than the aforementioned ones. But pressure had been mounting about the pension obligation certificates and allegations of political gamesmanship. The general retirement pension board, city council fiscal analyst and independent auditor general all agreed with the bonds.

Kilpatrick said his compromise was spending the better part of Friday at the council table. The foursome that voted no Wednesday tried at first to get the mayor to commit to no future layoffs period.

"It's a definitive moment in Detroit history. This issue saved jobs," he said. "I expect to be here a lot over the next three to four months."

Kilpatrick shook each council member's hand after it became clear they were going to pass the measure.

Councilwoman Alberta Tinsley-Talabi voted in favor both times.

"Residents, employees and their families scored a victory today, but the process and gamesmanship of some council members has made it an ugly victory that does not speak well for the entire Detroit City Council," she said.

You can reach Natalie Y. Moore at (313) 222-2396 or nmoore@detnews.com.