May 19, 2013
Detroit’s Fiscal Emergency
Posted on Mar 2, 2013
The governor of Michigan said Friday that the city of Detroit was in a state of “financial emergency” and announced that an independent overseer would be appointed to save it from collapse. However, the proposed solutions, which appear to consist mainly of spending cuts, inevitably mean more pain and suffering for Detroiters.
Like just about everywhere else in the U.S., tax revenue available to the city has plummeted. “More than a thousand jobs have been cut from the city’s payrolls since last June,” reports The Guardian. “Some areas of the city have turned off—and even cut down—street lights in order to save electricity.
“The mayor’s office says it has reduced spending to $1.1bn in the 2013 fiscal year from $1.4bn in 2009,” the paper continued. “The city has only managed to keep cash on hand in 2012 because of distributions from the state, according to a Moody’s report.”
A report released by the state last week described Detroit as being close to financial collapse. Experts are concerned the city could face the biggest municipal bankruptcy in U.S. history.
“I believe it’s appropriate to declare the city of Detroit in financial emergency based on the review team report,” Gov. Rick Snyder said during a town hall meeting at Wayne State University. “It’s not hard to justify that conclusion.”
Michigan law says an outside manager could lead the city into bankruptcy if there was no alternative. Once named, that official would have roughly 18 months to reverse the direction of the city’s finances before facing reappointment.
—Posted by Alexander Reed Kelly.
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