VOD COMPILED CHART ABOVE, BASED ON ERNST & YOUNG REPORT
Mayor, City Council plan severe cuts based on faulty report
- Even Ernst & Young disavows results: “reliance on this report prohibited by any third party”
By Diane Bukowski
November 21, 2011
DETROIT – Mayor Dave Bing and the City Council are basing their demands for up to 2,300 lay-offs, an increase in city income taxes, privatization and/or regionalization of Public Lighting, D-DOT and Health, 10 percent wage cuts, and 30 percent health care co-pays (amounting in reality to a 300 percent increase in all health costs), on a financial report from Ernst & Young that may be no more than another example of Wall Street cooking the books.
The report claims the city will face a $44.1 million cash “shortfall” by June 30, 2012. But EY disowns the report in a disclaimer, prohibiting reliance on it by “third parties.” Their report also makes clear that the “shortfall” is primarily due to the city’s debt payments.
Bing and the Council have talked about “shared sacrifice” from workers and residents, and even miniscule corporate cuts and taxes along with the $220 million the state owes Detroit (and, as Bing admitted on Channel 4’s “Flashpoint” Nov. 20, will not pay any time soon, such as before June 30.)
But the one entity they have left out of the discussion is THE BANKS!
How could they miss that? What have tens of thousands of people been occupying Wall Street and more than 100 cities across the U.S. about? IT’S THE BANKS, STUPID!
According to Ernst & Young’s figures, the banks will get over one half-billion dollars from the city this year. Previous analyses by VOD show that half of that is interest. SO MAKE THE BANKS PAY the alleged $44 million cash shortfall out of the interest. After all, they got ftrillions from taxpayers in bail-outs.
In the 1930’s, Detroit Mayor Frank Murphy declared a moratorium on the city’s debt to the banks and campaigned for national legislation to allow it.
After his address to the city Nov. 16 (see video below) Bing published the EY report on the city’s website, first discussing it in an illegal secret session with the City Council October 26. (Click on Ernst Young Cash Flow Update for the entire 29 PAGES of the report, which the city paid EY $1.7 million to produce.)
While this reporter is not an accountant or a rocket scientist, as most Detroiters are not, one really only needs common sense to review the report and see what’s wrong.
In a strict disclaimer, it states on page 29 that the “Cash Flow Forecast Report” is the product solely of City of Detroit management. (Are they afraid of being sued again?)
“With respect to prospective financial information relative to COD, Ernst & Young LLP (“EY”) did not examine, compile or apply agreed upon procedures to such information in accordance with attestation standards established by the AICPA [American Institute of Certified Public Accountants] and EY expresses no assurance of any kind on the information presented. EY did not assist in the preparation or assembly of COD’s prospective financial information or in the development of any assumptions therein.”
The disclaimer concludes, “Accordingly, reliance on this report is prohibited by any third party as the projected financial information herein is subject to material change and may not reflect actual results.”
(Excuse me–does that include third parties like the city’s unions and workers, who are to be at the table with first party Bing Nov. 22 to “negotiate” possible concessions, the city’s residents, and even — heaven forbid–the City Council?)
VOD compiled a summary of key information from the report, which includes the city’s actual and projected receipts, disbursements, and debt payments, from July 1, 2011 through June 30, 2012. Review the chart above–hopefully it won’t spoil your turkey day.
For those who missed it, below is the video of Bing’s vaunted speech to the city Nov. 16. But, poor man, despite the fact that he demanded 1,000 lay-offs, a 10 percent wage cut and health care cuts from the city workers, the City Council and the city’s daily media declared him a total wuss with not enough backbone to bring in the guillotine.
More on what our illustrious City Council members views shortly.