Detroit's sad Gypsies

When you ask Joseph L. Harris what he thinks about Detroit these days, he likes to talk about the Sea Gypsies of Southeast Asia.

No, Harris is neither on acid nor a surrealist poet. In fact, he may know more about Detroit city finances than anyone alive. A CPA by training, he was auditor general from 1995 to 2005, and then served as city finance director during the short-lived Cockrel administration.

For years, he has been warning that the city's finances were a house of cards, built by a shell game of constant borrowing to pay debts accumulated by more borrowing, and that it was bound to collapse. Naturally, nobody wanted to hear what he had to say.

Nobody paid attention till the crisis got acute last year. Today, however, the city has a mayor who is clearly not a hard-partying thug, but a sober businessman who talks like a tough deficit hawk.

The impression the freshly re-elected Mayor Dave Bing leaves is this: OK, we are in for some tougher times. There are going to have to be layoffs and givebacks and fewer city services. But somehow, we'll get through this, and have a balanced budget within three years.

But sadly, Joe Harris thinks the Bing administration's assumptions aren't much more realistic than what came before. I asked him about the recommendations of the mayor's crisis turnaround team. He said, "The team was asked to provide a solution, in five months, to the city's financial and operational deficiencies.

"Mission impossible," he snorted. In fact, Harris put together a whole PowerPoint presentation about the city's woes. To be fair, he isn't totally negative about the mayor or his team. 

His turnaround team's report, Harris said, "contains several good recommendations. It is a good first step toward the development of a strategic plan. But it contains unreasonable recommendations and expectations, and is, therefore, appallingly misleading." Mainly, he thinks it doesn't go far enough.

In the interest of full disclosure, Joe Harris lost his job as city finance director when Mayor Bing took office last May, and Tom Barrow said he would have asked Harris to return to the job, though the former auditor didn't say he wanted it, and took no part in the Barrow campaign. 

He says he does fine in private practice now. But he thinks what's wrong with the mayor's strategy, is this: "The city's policy of the past eight years was to ignore its underlying structural issues by borrowing over $400 million to meet the city's obligations, while the deficit ballooned. The present [Bing administration deficit reduction plan] suggests more of the same."

Bing told the Free Press Sunday that "the deficit is still somewhere between $280 million and $300 million. Eliminating that is going to take at least three to five years." His short-term objective is to get through this year "without adding to the deficit."

Worthy goal. But the biggest problem with that, Harris said, is that the mayor's assumptions are way too optimistic.

"The plan [assumes] there will be only $69 million in revenue shortfalls." Harris' own analysis indicates the deficit "will easily exceed $100 million." He thinks the mayor's deficit reduction plan will at best save two-thirds of that. "It will neither eliminate the current deficit nor prevent it from getting worse."

Harris thinks City Council should reject it.

Your columnist does not have the financial sophistication to know which set of budget projections are right — the mayor's or the former auditor's. The mayor has impressed me as a man of considerable integrity and business savvy. 

But it is worth noting that Harris' past projections about city finances have been much closer to reality to those of various administrations. However, it is also necessary to note that the mayor faces a devastating, and some would say, near-impossible situation.

The city has a collapsing population, Depression-era unemployment, and vast poverty and urban blight. 

Harris' reply: "Please remember that when confronted with an impossible situation, you don't need the mind of Socrates or the strength of Hercules; you just need to know what to do. 

"Detroit city officials don't yet know." What they should be doing, he thinks, is a rigorous overhaul of the whole process. Put the city on a three-to-five year budget. Develop a three-to-five year strategic plan. Hire the right independent, outside experts to do detailed reviews of all major city departments — the bus system, the police and fire and street lighting departments.

All of it, even the budget process itself. Drop the costly system of Detroit-based business preferences, which make no sense. Re-engineer and retool everything for maximum efficiency.

Joseph Harris knows, as Mayor Bing does, that unless Detroit does those things, someday, before too many years pass, the state will be forced to send in an emergency financial manager, as it did in Hamtramck and Highland Park and Pontiac. 

If that happens, then city residents will be effectively disenfranchised and will truly have lost their power to Lansing, and they will have only the leaders they elected to blame.

That much is clear. But so finally, what do the Sea Gypsies have to do with the flotsam and jetsam of Detroit?

For a moment, the auditor became a sort of poet. "The 'Sea Gypsies' are nomadic people who live in a cluster of islands off Burma (Myanmar) and the west coast of Thailand. They have survived using a combination of their experience of the sea and holistic perception."

According to Dr. Norman Doidge, when the giant tsunami struck the Indian Ocean five years ago, killing hundreds of thousands, not one of the Sea Gypsies died. They had all fled to very high ground or deep out to sea. Later, one was asked why they lived, while other island people, thought to be equally sea-savvy, had been killed.

The gypsy snorted. "They were not looking at anything. They saw nothing. They looked at nothing. They don't know how to look."

Sic transit Gloria, Detroit, in other words.

Unless we change our ways soon.

Death in the delivery room: There has been huge optimism for weeks among dozens of jobless journalists who wanted to believe in the potential success of a much-ballyhooed new, home-delivered newspaper, The Detroit Daily Press.

The paper went on newsstands last week, and was supposed to be home-delivered starting this week. But after a couple issues staggered into a few gas stations, guess what? The owners, Mark and Gary Stern, pulled the plug. To be precise, they opted to "temporarily suspend publication until after the first of the year."

Don't bet your mommy's pension on seeing it again. (I have to confess I paid for a subscription, naïve sucker that I am.) One of the briefly employed Daily Press reporters, Wendy Clem, complained bitterly that the paper had been sabotaged by the "behemoth bullies" of the Detroit newspaper partnership, whom she charges worked behind the scenes to do it in.

That wouldn't surprise me, but it's also true that the town's supposedly tough-minded journalists never asked the Sterns the hard questions. "What made them think they could sell ads in this market when the dailies and weeklies can't?" noted Ben Burns, a past executive editor of the Detroit News, and publisher of several papers.

"They've gotten considerable media attention without having to explain how they are going to set up and produce and distribute a daily newspaper," he added. The answer seems to be: They ain't.