Howze on Let it Rip: “Mr. Governor the state’s numbers are wrong”

Fox 2 News Headlines

Lisa L. Howze, candidate for mayor of the city of Detroit joined Fox 2′s Let it Rip, Thursday February 28 to discuss Detroit’s financial crisis. Howze was joined by former emergency manager Joe Harris and president of Rainbox PUSH – Michigan Rev. David Bullock.

Lisa defended Detroit and pushed Governor Snyder to deal in partnership with city leaders to recover and reinvest in the city without government takeover. Howze’s Detroit Kickstart Initiative outlines local, state and federal action to take today to right the city’s finances within a few years.

LISA ON REFORMING DETROIT’S FINANCIAL SYSTEM

“…There’s 5 billion dollars related to other post-employment benefit costs, in other words meaning retiree health care. We have a solution to address that…the state…is accelerating 25 years of obligations as if they are due today…”

Lisa L. Howze

PROBLEM:

Detroit’s retiree costs are growing. Poor management practices such as furloughs and layoffs encourage more city workers to retirement. While this practice may reduce payroll, this is a band-aid on to the city’s short-term cash flow needs. It also increases the city’s future health care obligations.

According to the 2012 Detroit Comprehensive Annual Financial Report (CAFR) City of Detroit Other Post-Employee Benefit costs were 804 million dollars. If Detroit continues its current management practices, these costs could grow to over 1 billion dollars by 2015.

SOLUTION:

Become last payer of liability; behind future employers and Medicare. City council can create progressive financial policy that closes a major loop vacuum of Detroit’s finances.

Reform of City of Detroit OPEB Policy. The city of Detroit does not have the financial ability to sustain its current post-employment benefit policy and must move from its current defined benefits plan toward more progressive measures.

New city of Detroit employees should be enrolled into a compensated benefit plan; which city employees would be matched 6-8% by the city. Post-employment benefit reform eliminates additional future liabilities for pension, healthcare and other costs.