Jackson Jambalaya

Almost forgot to post this little article from the Wall Street Journal. Bill Mojay had a "front row seat" to Detroit dysfunction described his experience over a month ago. This is the point where you put your coffee cup down or swallow what you are drinking. Enjoy.


Since Detroit declared bankruptcy on July 18, the city's crippling problems with corruption, unfunded benefits and pension liabilities have gotten the bulk of airtime. But equally at fault for its fiscal demise are the city's management structure and union and civil-service rules that hamstring efforts to make municipal services more efficient. I would know: I had a front-row seat for this dysfunction.

Last year, I served as chief operating officer of the Detroit Department of Transportation. I was hired as a contractor for the position, and in my eight months on the job I got a vivid sense of the city's dysfunction. Almost every day, a problem would arise, a solution would be found—but implementing the fix would prove impossible.

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.

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.

Then there was the obstructionism of the City Council. While I was at the DDOT, roughly 10% of bus-fare collection boxes were broken. In another city, getting a contract to buy spare parts to repair these boxes would be routine. The City Council publicly expressed outrage that we didn't fix the fare boxes, since the city was losing an estimated $5 million a year in uncollected fares.

But the reason we couldn't fix the fare boxes was that the contract for the necessary spare parts had been sitting, untouched, in the City Council's offices for nine months. Due to past corruption, virtually every contract had to be approved by the council, resulting in months-long delays. Micromanagement by the council was endemic; I once sat for five hours waiting to discuss a minor transportation matter while City Council members debated whether to authorize the demolition of individual vacant and vandalized houses, one by one. There are over 40,000 vacant houses in Detroit.

Union and civil-service rules made it virtually impossible to fire anyone. A six-step disciplinary process provided job protection to anyone with a pulse, regardless of poor performance or bad behavior. Even the time-honored management technique of moving someone up or sideways where he would do less harm didn't work in Detroit: Job descriptions and qualification requirements were so strict it was impossible for management to rearrange the organization chart. I was a manager with virtually no authority over personnel.

When the federal government got involved, it only made things worse. A federal lawsuit charging that the DDOT did not fully comply with the law in accommodating disabled riders had dragged on for years because of idealistic but painfully naïve Justice Department attorneys seeking regulatory perfection. I felt like a guy in the boiler room of the Titanic, desperately bailing to keep the ship afloat for a few more hours while the DOJ attorneys complained from their first-class cabin that their champagne wasn't properly chilled.

Detroit's other municipal departments had similar challenges. I would often compare notes with managers trying to run the city's street lights, recreation programs, police departments and smaller offices. All of us faced similar gridlock.

The last thing Detroit needs is a bailout. What it needs is to sweep away a city charter that protects only bureaucrats, civil-service rules that straightjacket municipal departments, and obsolete union contracts. A bailout would just keep the dysfunction in place. Time to start over. Essay