In the City of Warren, for example, the Mayor recently
attempted to privatize the garbage and rubbish disposal services. By his
estimates, privatization would have saved Warren taxpayers $2 million annually.
However, the union mounted a campaign which included having over 300 garbage
disposal representatives, their families and others present at a Council
meeting. The Warren Council voted unanimously against privatization.
While it is likely that the Warren Council recognized that
privatization would benefit their taxpayers, they did not have the political
will to resist those who opposed change. Several individuals cited problems in
the delivery of services by a contractor hired over 15 years ago as the reason
for retaining these services. Presently, approximately six municipalities in the
Metro area perform garbage and rubbish disposal internally.
The union did agree to concessions in the existing
contract. It is likely, however, that the concessions will not approach the $2
million savings cited by the Warren Mayor had this service been privatized. The
Mayor had wanted to provide these services in a cost-efficient manner, but was
denied this opportunity by a Council which did not have the political will to
tell 300 individuals that the costs incurred to provide this service internally
were greater than the market would bear. Effectively, the Council indirectly
voted an increase in taxes on Warren residents by failing to obtain these
services in the most cost-effective manner possible.
The City of Detroit is experiencing substantial fiscal
distress. Facing increasing losses and accumulating deficits, Detroit's Mayor
issued an order that reduced the compensation of non-unionized personnel by 10%.
After ordering these reductions, the Mayor pursued similar reductions from the
Detroit's unions. Before receiving the benefits of the reductions from the
non-unionized personnel or receiving any significant union reductions, the
Council reduced the concessions of the non-unionized personnel to 2% and
challenged the Mayor in court. The court sustained the Council's position, with
comments that the entire matter could have been resolved if the Mayor and
Council worked together for a common solution, rather than at odds with one
The Detroit AFSCME union reacted to the reduced concessions
of non-unionized personnel by not agreeing to accept the reductions proposed by
the Mayor. Instead, the Mayor laid-off approximately 100 AFSCME employees, which
at approximately $40,000 in compensation and fringe benefits each, would save
the City approximately $4 million over the next year. As the City is facing over
$100 million or more in operating losses over the next year, these lay-offs will
address approximately 4 days of the fiscal distress. Only now are there
discussions coming from city hall for the need to seriously consider
In a second example of Detroit's inability to improve
services to their fullest, the mayor received concessions from the garbage and
rubbish union of 10%. Presently, the City has estimated that the monthly garbage
and rubbish pick-up cost per household to be $6.85. If the full 10% savings is
realized, the cost per household will decline to approximately $6.17 per month.
A Detroit-based company has prepared an informal proposal to provide these
services for $4.92 per month. As there are approximately 347,000 households in
Detroit, the failure to privatize these services may have resulted in an annual
indirect tax increase of $5.2 million. Again, the political will is not present
to change. The current services have been justified by the Mayor's
administration declaring that the services are 'already efficient'.