2008/2012 – City expenditure has exceeded revenues by around $100 million each year. Early in 2013, Governor Rick Snyder declared that the city had a current deficit of $237 million. Long term debts then exceeded $14 billion and were going up.
The respective populations of Metro Detroit and Detroit Region have changed little in the past 40 years, however the city has declined from 1.5 million inhabitants to 0.7 million, signficantly impacting the local tax take.
As population drifted away from the city, it abandoned 78,000 buildings. 40% of Detroit’s street lights don’t work and police response time often exceeds an hour. Matthew Schneider, who represents the State of Michigan, has argued that a ‘tremendous storm’ is heading toward Detroit
In June 2013 the city defaulted on $2½ billion of debt by not paying $40 million in interest charges
In July 2013 the city filed for Chapter 11 – that meant bankruptcy protection from its creditors. The case is winding its way through the courts.
U.S. Bankruptcy Judge, Steven Rhodes must determine if the city is eligible for this step as Unions, retirees and pensions funds are objecting to the city’s bankruptcy.
Total liabilities exceed $18 billion and include $5.7 billion for healthcare and $3.5 billion for pensions. The liability for pensions is likely to significantly increase due to underfunding.
Should bankruptcy protection be awarded, the financial settlement will be instructive. The stakes on this are high, it tests how we handle ‘post-urban’.
I find this kind of detail of immense interest; it feeds my urge to write.
Financial and Operating Plan May 12, 2013
City of Detroit
Office of Emergency Manager
Kevyn D. Orr
Article: Bankruptcy was unavoidable, Detroit lawyer tells court
Reuters (Joseph Lichterman / Andre Grenon)
Good Luck from this side of the pond.