Detroit’s Dysfunction Won’t Be Fixed by a Bailout

Detroit is a mess. Sure, they’re bankrupt – everyone knows that now. But why? Bill Nojay gives some insight into the problems that hamstring Detroit from running the city in an effective way. He served as COO of Detroit’s Department of Transportation for eight months, and he got to see first hand the complete dysfunction of that department, and many others in Detroit. Detroit is crippled by outdated civil-service rules and union contracts that prevent almost anyone from being fired for anything, regardless of their performance. Pouring a bunch of taxpayer dollars into a bailout to “save” Detroit will not solve the problems there, only prolong them. 

We began staff meetings each morning by learning which vendors had cut us off for lack of payment, including suppliers of essential items like motor oil or brake pads. Bus engines that the transportation department had sent out to be overhauled were sidelined for months when vendors refused to ship them back because the city hadn’t paid for the repair. There were days when 20% of our scheduled runs did not go out because of a lack of road-ready buses.

The obvious solution for a cash-tight operation is to triage vendor payments to ensure that absolutely essential items are always there. But in Detroit, no one inside the transportation department could direct payments to the most important vendors. A bureaucrat working miles away in City Hall, not responsible to the transportation department (and, frankly, not responsible to anyone we could identify), decided who got paid and who didn’t. That meant vendors supplying noncritical items were often paid even as public buses were sidelined.detroit cyril-new

A major expense for Detroit is the cost of lawsuits filed against the city for various alleged injuries on municipal property. At the transportation department, there were hundreds of claims arising from bus accidents alone. How many of those claims were fraudulent? How many were settled (with the cost of settlement and legal fees posted against DDOT’s budget) at unnecessarily high cost?

It was impossible to know, since the city’s law department handled all litigation and settled cases without consulting the DDOT staff. It was the law department’s policy to settle virtually all claims—which meant that the transportation department became easy prey for personal-injury lawyers bringing cases with little or no merit, costing the city millions.

In the DDOT we tried to hire our own lawyers to fight these claims. But we were blocked by city charter provisions prohibiting any city department from hiring outside counsel without the approval of the Detroit City Council. When we inquired with the mayor’s office we were told that the union representing the law department—in Detroit, even the lawyers are unionized—would block any such approval.

Disability and workers’ comp claims were routinely paid with no investigation into their validity. More than 80% of the transportation department’s 1,400 employees were certified for family medical-leave absences—meaning they could call in for a day off without prior notice, often leaving buses without drivers or mechanics. Management’s only recourse to get the work done was to pay the remaining employees overtime, at time-and-a-half rates. DDOT’s overtime costs were running over $20 million a year.

Read the whole thing at the Wall Street Journal; it’s amazing: Bill Nojay: Lessons From a Front-Row Seat for Detroit’s Dysfunction – WSJ.com.

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