the Detroit News
Detroit — For the second time in a year, a state review team has found Detroit is in a financial emergency that requires Gov. Rick Snyder to intervene in City Hall.
But this time, if Snyder agrees that a financial emergency exists, the governor’s choices are more limited. He could appoint an emergency manager to keep Michigan’s largest city from plunging into bankruptcy, experts say, or he could continue state financial supervision through a new consent agreement, which seems a faint possibility.
State Treasurer Andy Dillon ruled out a bankruptcy filing at this time.
The six-member review team unanimously concluded in a report released Tuesday that the city failed to restructure its debt-laden bureaucracy under the financial consent agreement signed in April and that Detroit’s financial crisis requires Snyder’s intervention “because no satisfactory plan exists to resolve a serious financial problem.”
“We gave the city every chance to avoid the outcome we’re recommending to the governor today,” said Dillon, who led the review team.
He was more direct in an interview after the press conference.
“The city doesn’t have more time,” Dillon said. “They have limited cash right now, limited ability to access capital markets. I kind of think they’ve got one more bite of the apple to get it right.”
In a sobering report to Snyder, the review team found Detroit has:
A cash-flow deficit of more than $100 million without “significant spending cuts” by June 30, on top of an accumulated deficit of $327 million.
$14.9 billion, including unfunded pension and employee retirement liabilities. The city also needs $1.9 billion during the next five years to make payments for the liabilities, but city officials have no debt payment plan.
Accumulated deficits in the general fund of $155.4 million to $331.9 million annually since the 2005 fiscal year.
Dillon said the city has been “masking over” annual deficits with long-term borrowing. The report said that without the borrowing, the deficits would total $937 million in fiscal year 2012.
“We believe there’s a financial emergency in the city and that there’s no plan in place to correct the situation,” Dillon said