Dec 4 Detroit Mayor Dave Bing's administration
urged the city council on Tuesday to take actions that are
needed to win the release of money from the state of Michigan so
the city can avoid running out of cash this month and ending the
current fiscal year with a bigger deficit.
Kriss Andrews, Detroit's program management director, said
the city will still face a deficit in its current fiscal year
even if the city receives $30 million in bond proceeds from the
state by year end.
He said that with a nearly $47 million deficit projected for
fiscal 2013, which ends on June 30, the council has to move on a
series of conditions laid out by the state in November.
"You can't bridge a $46 (million), $47 million cash
deficiency with $30 million. It doesn't work," he said, adding
that Detroit will have to take actions to prove to state
officials that it is in compliance with agreements aimed at
improving the city's finances and try to win the release of more
"We have to recognize we're in a place where we have no
choice but to change," Andrews said.
The city of 700,000 has been hard hit by a steep population
drop, years of severe budget deficits and escalating employee
costs - factors that led state officials to begin an
intervention process about a year ago.
Detroit officials were hoping to get the $30 million, raised
through bond sales earlier this year that generated $137 million
in proceeds, to avoid running out of cash later this month. Bing
has said he will turn to unpaid leaves for workers and other
cuts as an alternative.
Michigan officials are withholding the money until the city
council acts on a series of so-called milestones, including the
hiring of law firm Miller Canfield to work on issues related to
the city's financial stability agreement with the state. The
nine-member council rejected the contract last month, citing
potential conflicts of interest by the firm and concerns over
the legality of the contract.
Another series of milestones, including the retention of a
restructuring team and execution of contracts for an audit of
dependents for medical benefits and payroll outsourcing, face a
Dec. 14 deadline.
The council may consider some of these issues at a meeting
On Wednesday, the council will be back in session to take up
an amendment aimed at fixing an approximately $29 million
pension payment that was not budgeted for fiscal 2012.
Cheryl Johnson, Detroit's finance director, said the action
is required so the city can complete its fiscal 2012
comprehensive annual financial report by year end, making the
city eligible to obtain state revenue-sharing payments.
Michigan in the past has withheld the payments from Detroit
when it was tardy in completing its CAFRs.
Separately, the city will have the money make a $29.3
million payment due Dec. 15 on outstanding pension debt,
according to Johnson.