Where do things stand with Flint and a possible bankruptcy? A lot riding on a lawsuit

Oct 7, 2014

Credit Steve Carmody / Michigan Radio

A recent analysis by Moody's Investor's Service offers the prediction that Flint will not follow along the bankruptcy path set by Detroit.

Even though the two cities share many of the same problems and challenges, Moody's believes bankruptcy is not in the cards for Flint.

John Pottow is a University of Michigan law professor and a bankruptcy expert. Pottow also says bankruptcy is unlikely for the city right now, because he believes Flint actually has a long term term plan of meeting a balanced budget since a state-appointed emergency manager was appointed several years ago.

"Flint... rolled up their sleeves and really started feeling some pain. They reduced their city workforce by 20%; they reduced the pay of people who remained by about 20%; they voted to increase taxes to cover police and fire services; and they have increased usage fees for various services like utilities," says Pottow.

But Pottow says it all still depends on Flint winning a pension lawsuit that's going on right now.

The possibility of Flint's bankruptcy will likely rise, according to Pottow, if the city loses the lawsuit and has to maintain the full health benefits that city workers retired with.

* Listen to our conversation with John Pottow above.