Marathon Petroleum, which received a $175-million tax break from the City of Detroit in a mammoth expansion project, is coming under fire from City Council for failing to hire enough Detroiters.
When Marathon asked the city for the tax break as part of the company’s plan to expand its operations in southeast Detroit in 2007, with the appeal came a pledge to recruit Detroiters for new jobs at the refinery.
The City Council granted the company the personal property tax abatement, forgoing millions in tax revenue. Even with the tax break, a city analysis estimated the expansion would generate $181 million in income taxes, real property taxes and other fees for the city over two decades.
“As we discuss job creation, please understand that we will do what we can to hire qualified Detroit residents,” then-Marathon Senior Vice President Garry Peiffer wrote to City Council in 2007. “It is our intention to work closely with the Detroit Workforce Development Department and a local institution of higher education to develop curriculum and offer training for interested Detroit residents.”
But the vision to hire more Detroiters never materialized. Now city officials will more closely monitor Marathon’s hiring practices to ensure the company is making an effort to hire Detroit residents.
“In a city with double-digit unemployment, any company that’s receiving a tax abatement of nearly $180 million should be giving more back, including hiring residents,” Councilwoman Saunteel Jenkins said in an interview.
Marathon employs 514 full-time workers at its refinery, thanks to the $2.2-billion expansion. That’s up from about 320 employees in 2007, when the city approved the personal property tax abatement, the largest of its kind in Detroit history.
Of the 514 employees, 30 are listed as Detroit residents as of January. In 2007, before the expansion, the company employed 15 Detroit residents. That means fewer than 6% of Marathon’s workers at the refinery live in the city, according to the company’s employment records, which must be submitted to the city annually under terms of its abatement agreement.
Susan Tompor reports: Susan Tompor: Bankruptcy Ruling Shocks, Disappoints Detroit Retirees
Darwina Wallace, 69, first heard that her city pension was a step closer to being cut when a friend who also retired from the city called her “up in arms” and demanded that she turn on the TV.
Wallace, who lives in Detroit, discovered that U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday morning that yes, Detroit is eligible for Chapter 9. The shocker for retirees — Rhodes also ruled that city pension benefits won’t receive heightened protection in bankruptcy and may be cut.
“It makes me sick,” said Wallace, who is single and receives a pension that’s less than $2,600 a month after taxes in addition to Social Security. She started working for the city in 1977 as a 911 operator and last worked in the water department as an analyst gathering data for capital improvement programs. She retired in 2006 after 31 years on the job.
“It’s definitely going to affect me. These people, the karma is going to get them. They don’t seem to care about people,” she said.
After Detroit filed for Chapter 9 in July, many City of Detroit retirees closed their eyes and crossed their fingers that city pensions would be sacred and protected by the state constitution. Now, there’s no doubt that retiree health care and pensions are at risk. A change to health care coverage is planned for March, but cuts in pensions remain unknown and painfully uncertain.
What is even more sickening is the cheering and ululating from the wingnuts that elderly retirees won’t be receiving their meager pittance. HURR HURR GREEDY YOONYUNZ!!!!11!!!
Look #UniteBlue communist union thugs threatens judge in detroit ruling. Who's that idiot woman who told me lack of civility taints convo?
.Relax Detroit union members, Obama will eventually fund your bloated pensions with taxpayer money. #UniteBlue
Washington — U.S. Sen. Rand Paul, who previously said Detroit would receive a taxpayer bailout “over my dead body,” will travel to the Motor City next month to offer his fix for the struggling city.
Paul, the Kentucky Republican and potential 2016 presidential candidate, will deliver his plan at the Detroit Economic Club on Dec. 6.
Paul last traveled to Michigan in September for the Mackinac Republican Leadership Conference, where he said he regretted his previous comments about Detroit made after the city’s July 18 municipal bankruptcy filing. At the GOP confab, Paul won the presidential straw poll and urged the Republican Party to be more inclusive.
In an interview in September with The Detroit News, Paul highlighted legislation he plans to introduce to help Detroit by forgiving federal personal income and corporate taxes as well as potentially payroll taxes in distressed cities to spur more hiring and attract new jobs. He said he intended to package the legislation as an effort with states that also forgive their taxes in targeted areas with high unemployment and poverty.
“Right now I think Detroit is in a downward spiral and something’s got to be done,” Paul said of his legislative effort in the September interview.
Paul will travel to Detroit to unveil the final touches on that legislative effort — further demonstrating his insistence Republicans need to build support by traveling to all neighborhoods — even those like Detroit that have been Democratic strongholds.
From The Detroit News: detroitnews.com
Yeah let’s eliminate all sources of municipal and state revenue! That should work!
What an asshat.
DETROIT, MI - Mike Duggan defeated Benny Napoleon to become Detroit’s next mayor on Tuesday night.
The city and county clerk’s offices had not posted results by 10 p.m. Tuesday, but numbers tracked by the Detroit Free Press have Duggan leading, with 100 percent of precincts reporting, 55 percent to 45 percent. The newspaper, along with WXYZ, projected Duggan to win.
Duggan overcame perceptions of a racial divide and being kicked off the ballot in the primary election to overtake Napoleon, the Wayne County sheriff.
He’ll be the first white mayor to lead the city since Roman Gribbs, who left office in 1974.
About 82 percent of Detroit residents are black, but Duggan’s history of turning around struggling organizations won over even the leader of Detroit’s Black Panther Party.
Race was a non-factor for many voters, with Duggan working his way through the city’s neighborhoods, delivering his message in more than 200 intimate house parties held across Detroit in a year of campaigning.
Duggan is a former county prosecutor who went on to lead the Detroit Medical Center and SMART suburban bus system, engineering financial comebacks in both organizations.
The office of Mayor is non-partisan, but Duggan is a Democrat.
Detroit— City Hall’s estimated $1.4 million-a-month restructuring tab includes a consulting company billing $275 an hour for a 22-year-old financial analyst who graduated from college last year, according to records obtained by The Detroit News.
Wade P. Johnston got his bachelor’s degree in finance in 2012 from Michigan State University and is part of the team the consultants, Conway MacKenzie, have working to turn around city operations. The Birmingham firm billed the city $288,671 for the work of 11 staffers over two weeks in July, including more than $26,000 for Johnston alone.
The records give a rare look at the costs being picked up by the city and state, a breakdown city council members and other critics have argued has been hidden amid Detroit’s historic bankruptcy. Conway MacKenzie’s hourly rates range from $495 for the group’s senior managing director to $275 for Johnston, who started with the company in June as a senior associate, according to records.
Critics questioned the wisdom of spending $275 an hour for a 22-year-old.
“What experience would he have to base that hourly rate on?” said Michael Wells, Detroit Public Library retiree and former UAW Local 2200 president. “I hope these firms, that they don’t use this as an opportunity to enrich themselves. I don’t expect them to be altruistic, but I don’t expect them to pick on a carcass.”
But a spokesman for Emergency Manager Kevyn Orr’s office defended the spending, saying the hourly amounts were negotiated by the city as flat rates within job classifications to save money. And Conway MacKenzie has given the city a 25 percent discount off its bills, the spokesman, Bill Nowling, said.
“The city benefits because it pays one rate,” Nowling wrote in an email. “So, there are others with much more experience billing at the same rate within the classification.”
“Detroit has more than five decades of administrative neglect and deferred maintenance. The money being spent on the city’s restructuring professionals is an investment in improving city services.”
Conway MacKenzie’s contract allows it to bill up to $400,000 every two weeks for its work, which was first approved by Mayor Dave Bing and the Detroit City Council in January. The bill obtained by The News, covering July 8 through July 21, didn’t give a description of the work the employees did.
Officials from Conway MacKenzie wouldn’t comment, senior managing director Charles Moore said Monday. Johnston didn’t return calls for comment.
From The Detroit News: detroitnews.com
No wonder Detroit is fucked, Kevyn Orr approved this boondoggle!
Look at this drooling shill in the comments:
Ken Wojtowicz · Follow · Top Commenter · University of Detroit Mercy
Why do the best law firms, financial advisors and consultants demand, and gets such high fees for their services? The answer is simple. It’s the same reason that the Tigers pay Miguel Cabrera $21 million per year for his services. These folks bring to the table a skill set that is tops in their field…..and they deliver. The difference of going forward under the best of possible action plan vs. some mediocre shot in the dark can be millions….and even billions over time. Here is not where decision makers should be bargain shopping. Let the Union gurus and their financial wizards poke around elsewhere to find something worthy of their investigative prowess.
Detroit is solely responsible for its current situation because “the city was dumb, lazy, happy, and rich” for many years, according to emergency manager Kevyn Orr. The unelected lawyer’s explanation for the city’s insolvency ignores the national and regional forces at play over decades.
In reality, the city was battered by large socioeconomic forces it could hardly influence, according to the Urban Institute’s Rolf Pendall and University of Pennsylvania professor Thomas Sugrue. Both experts were adamant in interviews with ThinkProgress that blame for the present situation should not lie primarily with Detroiters or their local officials. Instead, they pointed to the flow of capital and people to the suburbs, massive disinvestment in the city, and state and federal withdrawal from urban policies as the primary drivers of Detroit’s troubles. The sprawling metropolitan area developed into an unwieldy, non-adaptable city over years, preventing it from the sort of rapid reinvention of other “Rust Belt” cities like Pittsburgh.
Even if Orr meant the city’s “body politic” and not its citizenry, as his spokesman has claimed, the next section of the Wall Street Journal profile that includes the “dumb, lazy, happy, and rich” quote hints at why Orr would cast the bankruptcy in these terms. The city had “a covenant,” Orr said: “if you had an eighth grade education, you’ll get 30 years of a good job and a pension and great health care, but you don’t have to worry about what’s going to come.” Today, the pensions portion of that “covenant” is Orr’s primary target in bankruptcy.
Orr says the city’s pension funds are $3.5 billion short. But that figure comes from rough preliminary estimates his office has thus far refused to release for review. Orr’s office has not responded to a week-old ThinkProgress request for comment on the figures, but Reuters municipal bond expert Cate Long calls them “pension voodoo.” The most recent full evaluation found the funding gap was five times smaller than Orr alleges and in better shape than most pensions around the country.
If their pensions are cut, thousands of city of Detroit retirees won’t have anything to fall back on other than their own savings, the support of their families or charity. That’s because the city’s firefighters and police aren’t eligible to receive Social Security benefits.
When Social Security was first instituted, the plan didn’t cover any worker with a public pension. States can opt in, and Michigan has, but each city, county, township, school board or other local government entity also has to join. Existing public pension funds can continue to operate out from under Social Security, and with generous government pensions, many workers felt they were getting a better deal from their own pension fund than they’d ever get from Uncle Sam. Instead, the contributions the employer and worker would have made to Social Security benefits went to their pension funds.
As cities, counties and states have phased out pensions that pay a guaranteed benefit in favor of plans where workers and the employer contribute to a defined contribution plan similar to a workplace 401(k) account, most government workers not covered by a public pension or a special exemption have been required to contribute to Social Security. Since Detroit’s firefighters and police officers still had a public pension plan, they continued to avoid Social Security payments.
Of the nearly 21,000 city retirees now collecting pensions, 9,017 retired police officers, firefighters or their surviving spouses don’t get Social Security, or about 44 percent of all city pensioners.
Workers who spend part of their careers working in the private sector and part under a public pension also take a hit to their Social Security payments when they retire. The amount of their public pension offsets their part of their Social Security benefits, reducing their monthly payments.
From The Detroit News: detroitnews.com
Sen. Rand Paul (R-Ky.) said Tuesday he has begun talks with his legislative staff about drafting a conservative alternative to a possible federal bailout of Detroit if the White House and congressional Democrats push to rescue the city from financial ruin.
During a phone interview on Glenn Beck’s radio show, Paul said he might push a Republican plan to assist Detroit that would emphasize conservative pet policies to stimulate economic growth and bring the troubled municipality back to fiscal well-being.
“I think there is a way, in an economically depressed zone, to have some tax forbearance, reduce some taxes, encourage people to come in and take abandoned property,” he said. “I will not be for borrowing any money from China to try to bail out Detroit, particularly if they continue the same policies.”
Paul also said he hopes the proposal could generate support for Republicans in the overwhelmingly Democratic city.
“Maybe the people that have been voting for the Democrats for 50 years in Detroit — who ran the once-great city into the ground — maybe they’d choose some new leadership, and the Republican Party would have a resurgence in Detroit,” he said. “But that may be wishful thinking.”
So, after that teasing headline, he doesn’t have a plan after all. Just sell abandoned properties for $1 and encourage urban homesteading (like they haven’t been doing that for the past 30 years), but without the property taxes. It only cost $60,000 or so to restore a typical ruined Detroit house, that’s assuming that it can even be salvaged because all the copper piping and other valuable building metals have already been looted.
He has no plans for restoring the infrastructure, rebuilding the public schools and public libraries, or encouraging business.
OK so here is Rand Paul’s Great Plan:
1. Urban homesteading
And Another Rand Paul Great Plan:
1. Build a bunch of Walmarts
2. Send out fleets of slave-trucks to grab random Blah people off the streets and force them to work in Teh Walmarts for bowl of gruel a day
In the wake of Detroit’s bankruptcy, you may be wondering: How could anyone be surprised that a city so tied to manufacturing faces crippling problems in an era that has seen such an intense public policy assault on domestic American manufacturing? You may also be wondering: How could Michigan officials possibly talk about cutting the average $19,000-a-year pension benefit for municipal workers while reaffirming their pledge of $283 million in taxpayer money to a professional hockey stadium?
These are fair questions — and the answers to them can be found in the political mythology that distorts America’s economic policymaking.
As mythology goes, the specific story being crafted about Detroit’s bankruptcy is truly biblical — more specifically, just like the fact-free mythology around the Greek financial collapse, it is copied right from the chapter in the conservative movement’s bible about how to distort crises for maximum political effect.
In the conservative telling of this particular parable, Detroit faces a fiscal emergency because high taxes supposedly drove a mass exodus from the city, and the supposedly unbridled greed of unions forced city leaders to make fiscally irresponsible pension promises to municipal employees. Written out of the tale is any serious analysis of macroeconomic shifts, international economic policy failures, the geography of recent recessions and unsustainable corporate welfare spending.
This is classic right-wing dogma — the kind that employs selective storytelling to use a tragic event as a means to radical ends. In this case, the ends are — big shocker! — three of the conservative movement’s larger long-term economic priorities: 1) preservation of job-killing trade policies 2) immunity for corporations and 3) justification for budget policies that continue to profligately subsidize the rich.
Pretending Detroit and the NAFTA era are unrelated
The bait-and-switch on the first two objectives is fairly easy to see.
Detroit isn’t just any old city — it happens to be the biggest population center in the state hit the hardest by the right’s corporate-written trade agenda. Indeed, according to the Economic Policy Institute, the state lost more jobs than any other from NAFTA (43,600, or 1 percent of its total job base) and lost another 79,500 jobs thanks to the China PNTR deal. And that’s just two of many such trade pacts. Add to this the city’s disproportionate reliance on American auto companies which made a series of horrific business decisions, and Detroit is a microcosmic cautionary tale about what happens when large corporations are allowed to write macro economic policy and dictate the economic future of an entire city.
Detroit’s half of the Detroit-Windsor Tunnel was valued a few years ago at $65 million.
A prototype of the 1963 Ford XD Cobra owned by the Detroit Historical Museum carries an estimated price of $1 million.
Belle Isle? Maybe several hundred million dollars for the 982-acre park in the Detroit River between the U.S. and Canada. Maybe more.
If everything is indeed on the table when it comes to turning Detroit’s assets into dollars, then the possibilities are nearly endless, bewildering and sometimes bizarre.
Detroit is teetering on the brink of the largest municipal bankruptcy in American history. The city’s emergency manager, Kevyn Orr, and his team have said they want to evaluate everything the city ownas they begin negotiations with creditors in the face of $15 billion to $17 billion in debt and future pension obligations.
Orr already created a tsunami of controversy when he acknowledged late last month that billions of dollars worth of art that the city owns and has housed at the Detroit Institute of Arts are vulnerable to creditors. But he potentially could sell or privatize numerous other city assets, too, from public parks to operations of the city’s Water and Sewerage Department to sundry treasures found in some of Detroit’s other cultural institutions.
What is so surreal — and tragic — about the financial sinkhole that threatens to swallow Detroit is that the morass is deadly serious yet full of “Alice in Wonderland” perversity.
The very future of the city is at stake, as well as the quality of life throughout southeast Michigan. Yet the possibility of selling off city assets also leads directly to questions such as how much does a giraffe cost? And how does a citizenry cope with no-win scenarios pitting one indispensable gem against another?
What BofA, JP Morgan Chase, Merrill Lynch & UBS would REALLY REALLY like to do is send buses through the streets of Detroit, snatch up men, women & children, chain them all together and then auction them off to the highest bidder. And the GOP would CHEER and CHEER and CELEBRATE.
Romney was wrong about illegals, they don't need to self deport, we should just deport them all or send them to Detroit. #uniteblue #libcrib