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November 2000, Louis Schimmel swept away the government of Hamtramck,
Michigan, and literally took over the city — lock, stock, and
barrel. Appointed by the governor under a 1990 law that allows the
state to assume temporary control of a dysfunctional municipality,
Schimmel has transformed the finances and the infrastructure of
Hamtramck. The result may not be an argument for dictatorship, but
it sure speaks volumes about the virtues of things like common sense
and privatization.
But first some
background. How did this town of 23,000, an independent enclave
entirely surrounded by the city of Detroit, get into dire straits
to begin with? It's a case study of unions run amok and politicians
unmindful of other people's money.
Poorly negotiated
contracts with city employees' unions failed to establish a strong
link between job performance and pay levels. For example, Hamtramck's
contract with the American Federation of State, County, and Municipal
Employees (AFSCME), the union that represents city clerical and
Department of Public Works (DPW) employees, provided for annual
wage increases of as much as four times the rate of inflation. Work
rules stymied productivity and while the city's population fell
by more than half during the last 50 years, the size and expense
of the city workforce resisted any adjustment. AFSCME-represented
city employees were entitled to up to 40 paid vacation days a year,
plus 15 paid sick days, 13 paid holidays, 3 paid emergency leave
days, and 3 paid personal days. On top of all that, each employees
also got a paid day for his birthday!
City services
deteriorated, driving taxpaying people and businesses elsewhere,
but city workers made out like bandits. They neglected their jobs,
sometimes to the point of threatening the health and safety of citizens.
Garbage laid in the streets for as long as seven weeks, dramatically
increasing Hamtramck's population of rats and other disease-carrying
scavengers and pests.
The DPW suffered
from poor equipment, inadequate supplies, and lax supervision. The
city had 95 fire hydrants that were either nonworking or in need
of repair, and DPW expertise did not include a knowledge of how
to fix them. To make matters worse, Hamtramck officials were prohibited
by union contracts from subcontracting out any work including fire
hydrant repair and garbage collection.
When the governor
put Schimmel in charge of the city, the council and mayor were at
loggerheads over everything, even as a deficit of $3 million in
a budget of $16 million stared them in the face. Hamtramck was at
a standstill and swimming in both garbage and red ink. About his
first day on the job, Schimmel told the Metro Times, "Everything
was such a mess. There were 40 bank accounts. Financially, nobody
knew where anything was. Nobody even knew what the deficit was.
There were all sorts of funny arrangements with people for this
or that. The records were deplorable."
Yes, dear readers,
this was what a government had done to itself and to the citizens
it was supposed to serve. All that talk about selfless "public
service" was laid bare in terms more vivid and tragic than
in any other Michigan city in recent memory. This wasn't public
service; it was more like serve yourself, at the expense
of the public. This was a band of thieves and incompetents who could
get away with what they were doing only because they worked for
government, where the "customers" can at least for a time
be treated more like hapless captives.
With dictatorial
powers that essentially put the mayor and city council out of business,
Schimmel lost no time in making big changes. Just weeks into the
job, he fired nine people and eliminated 21 jobs that had been unfilled
for some time. That was only the beginning. By the end of his first
year, he reduced the bloated, feather-bedded workforce by 17 percent,
from 162 employees down to 135.
He negotiated
a new contract to provide for privatization of all DPW work. This
arrangement has allowed the city to competitively contract with
private sector firms for trash pickup, fire-hydrant repair, tree
trimming, snow plowing, street repairs, water and sewer line repairs
and nearly all other services formerly provided by the DPW. By public
auction, he sold off unnecessary city vehicles and equipment for
$186,000. Services have improved dramatically. At much lower cost,
garbage actually gets picked up on time now, trees really do get
trimmed, snow actually gets plowed, and across the board, a day's
work for a day's pay genuinely takes place in Hamtramck.
It didn't come
easily. Schimmel had to sit down, look the union bosses squarely
in the eyeballs and tell them in no uncertain terms that times had
changed. "You're going to have to work. You have to put in
an eight-hour day," he advised them from across the bargaining
table. They squealed and they squirmed but in the end, they had
no choice but to get honest with the taxpaying public that was paying
their salaries.
One reason,
perhaps the main reason, that the unions came around was that Schimmel's
track record clearly suggested he was a man of action. For four
years in the late 1980s, he was the court-appointed receiver for
the bankrupt city of Ecorse, Michigan, about a 20-minute drive downriver
from Hamtramck. There, he privatized almost everything, disciplined
the unruly unions, and eliminated a huge city deficit.
Before the
Hamtramck takeover, the city owned a fairly large amount of untapped
capital in the form of idle land. Under Schimmel, the city is leasing
land for a cell-phone tower that now generates $26,000 annually.
He is in the process of selling other land to local commercial enterprises.
Before Schimmel
arrived, the city operated a parking meter system that was in a
constant state of disrepair. A large number of meters were not working
and parking enforcement was almost nonexistent. The system has been
the subject of scandal, with allegations of money being stolen from
the meters. City parking lots were in disrepair as well. Schimmel
directed the city to sign a lease with its own Downtown Development
Authority (DDA) to provide for the operation of the parking system.
The DDA, in turn, is repairing the parking meters under Schimmel's
watchful eye and at the same time, contracting out the management
of the parking system.
Schimmel has
renegotiated police- and fire-personnel contracts that had been
overly generous (annual pay hikes of nearly 10 percent per year
for police officers, for example). Wage hikes in the new contracts
were adjusted to be more in line with inflation, departments were
reorganized, and 15 positions were eliminated. The annual savings
from those measures alone have amounted to $1.6 million.
Lou Schimmel
is still busy fixing Hamtramck and downsizing its public sector,
but he's looking forward to finishing the job by the end of 2002.
He'll leave behind a decidedly smaller city government, lots of
newly privatized and spiffed-up services, and a city that has a
chance to function and attract people and business once again.
Once again,
the private sector has come to the rescue of the public.
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