Detroit mayor looks to privatize city finances, comments on privatizing city power department

DETROIT — Mayor Dave Bing is discussing contracting out two city finance department functions, according to the Detroit Free Press. There are about 100 city workers currently providing tax collection and payroll services, according to the Free Press. The city uses an antiquated system that requires manual processing.

This is not the only function the mayor is looking to contract out. Bing stated on the PBS "Tavis Smiley" program that the city's Public Lighting Department is an example of a service that is not a core government service and may be considered for privatization.

"I can't say that everything has to be privatized, but there are some things that, in this city, we ought not be doing as part of government," he stated.

Bing expressed concern for current employees, possibly suggesting that they may find new jobs in a contracting company, but he emphasized, "When we find out that we're not competitive, it ought to go out."

The city's Public Lighting Department generates electricity for the city's streetlights, utility poles and traffic lights, as well as 890 other buildings in Detroit, according to the Detroit Free Press. The city's power station is also in need of major upgrades.

The mayor is following through on these ideas. In an action plan posted on the city's Web site, the mayor expects to outsource the management of the city airport and parts of its financial operations. He also plans on closing the city's Mistersky Power Plant.

The Mackinac Center recommended privatizing the department in 2001, pointing out that its costs were 160 percent higher than private-sector operators and that a sale of its assets at that time may have resulted in a payment of $301 million to $501 million.

References: "Bing: Privatizing can save city cash," Detroit Free Press, Aug. 14, 2009

"Bing wants to privatize lighting," Detroit Free Press, June 10, 2009

Tavis Smiley show,

"Bing Administration Crisis Turnaround Action Items," City of Detroit web site, accessed Oct. 13, 2009.

"Time to Privatize Detroit's Public Lighting Department," Michigan Privatization Report, Winter 2001