December not so dire for Detroit

Dec 4, 2012

Detroit city officials are sending some mixed signals when it comes to the city’s crumbling finances.

On the one hand, officials said Tuesday that the city won’t run out of cash this month. They had previously said that would happen without state help, in the form of releasing at least $30 million in Detroit bond money the state is withholding.

On the other hand, Deputy Mayor Kirk Lewis says the city faces an even bigger than expected cash shortfall by the middle of next year.

Lewis says that means two things will have to start next month: employee furloughs, and layoffs.

“So those two actions could probably save us somewhere around 10 million dollars each in the period. There would still be a shortfall. So we really have to start implementing some of these structural changes.”]

It’s not exactly clear what those “structural changes” are, but the state wants outside restructuring firms to help guide the process.

Lewis says Mayor Dave Bing will present the City Council with a more specific plan next week. Bing now says he’ll now form a committee to work “collaboratively” with the City Council to address the crisis.

Council President Pro-Tem Gray Brown says that’s fine. But Brown says there was a similar committee about a year ago—but the mayor didn’t participate, and nothing got done.

“The mayor has to be in the room, or at least someone in the room who can make decisions on moving forward," Brown said.

Estimates show Detroit could end the fiscal year next summer with a more-than $80 million estimate.

Matt Helms of the Detroit Free Press reports that 2013 awaits, and trouble could start in the first quarter.

But he warned that the first three months of 2013 will be critical, and Detroit will have to lay off workers and issue unpaid furloughs to save cash. Detroit faces a cash shortage of $47 million by June 30, a number expected to grow as the city deals with unfunded pension obligations and faster-than-expected declines in property tax collections and other levies.