One might think that a city as cash-strapped as Detroit would leap to cash a check for a million dollars, but instead it languished in a drawer for a month before anyone remembered it was there. That’s not even the worst part of the million-dollar month story told by Bloomberg News, nor is it the most appalling example of the hole out of which the city must climb in order to salvage itself. The worst part was getting the check in the first place, as no one had set up a system for electronic transfer of funds within city government by February 2013:
In late February, cash-strapped Detroit received a $1 million check from the local school system that wasn’t deposited. The routine payment wound up in a city hall desk drawer, where it was found a month later.
This is the way Detroit did business as it slid toward its bankruptcy filing, which it entered July 18. The move exposed $18 billion of long-term obligations in a city plagued by unreliable buses, broken street lights and long waits for police and ambulances. Underlying poor service is a government that lacks modern technology and can’t perform such basic functions as bill collecting, according to Kevyn Orr, Detroit’s emergency manager.
“Nobody sends million-dollar checks anymore — they wire the money,” said Orr spokesman Bill Nowling. Except in Detroit.
That’s hardly the only decades-old government infrastructure coming to light in the city’s financial collapse. Detroit has no central computer system — not for financials, or for anything else. The last time Detroit invested in computer systems to improve efficiency was the 1990s, and the Oracle system purchased was never fully put into use. That kept the city from properly collecting tax revenues, something that might have assisted in preventing the collapse in the first place.
But that’s hardly the only place where Detroit ran off the rails, as Bloomberg explains:
Union rules have “bumped” workers into positions they aren’t qualified for as departments make cuts, he said. The city has no training programs and doesn’t evaluate employees in 2,500 job classifications.
Say what? It’s impossible to comprehend an organization of any significant size that doesn’t train its workforce to do the jobs assigned to it. That practically guarantees incompetence and inefficiency, and on that guarantee, Detroit has certainly delivered. The lack of job evaluations is similarly shocking, although probably a little less incomprehensible. Unions don’t care too much for job evaluations, preferring to promote people by seniority instead. Whether union pressure was a factor in this stunted organizational development should be investigated by the city, but somehow I doubt that will be a high priority amidst the collapse.
City dwellers wonder how the bankruptcy will affect the basic services any major city must provide to survive. It’s more of a wonder that the services got provided as long as they did. First, thanks to the lack of computerization, payroll processing costs Detroit more than four times as much as other cities, because payroll is done by hand. So are income-tax receipts and accounts payable, which has stretched payment waits for contractors to as much as six years. There aren’t enough ambulances to respond to emergency calls as a result, and other city vehicles are barely operable, including police cars and especially garbage trucks:
City vehicles are old and their maintenance is poor, said Gary Brown, who left the City Council to help Orr improve municipal operations. A group of companies, including Detroit- based General Motors Co., have agreed to pay about $8 million to provide new vehicles for emergency medical services and police.
Brown said it’s difficult to find 45 operable garbage trucks in a fleet of 180 to pick up trash five days a week.
“That’s unconscionable,” he said, citing too few mechanics, lax work rules and a lack of spare parts. He said there are plans to hire a hauling company to pick up trash.
Hauling companies aren’t going to wait around six years to get paid, though.
It’s not as if Detroit wasn’t getting funds, either. Politicians at the state and federal level have been sending cash directly and indirectly to the city for years, attempting to arrest its collapse. Where did the money go? That should be the real focus of the post-collapse investigation, and the bondholders who end up losing their shirts should be screaming for that probe.