Jan 25 Cash-strapped Detroit will get $20
million from the state of Michigan after substantially meeting
goals aimed at restructuring the city's sagging finances, city
and state officials said on Friday.
Detroit Mayor Dave Bing said an agreement was reached with
Michigan to release the money, which was raised in a bond issue
last year, from an escrow account held by the state.
"The release of these funds will occur at my discretion,"
Bing added in a statement.
However, Terry Stanton, a spokesman for Michigan's Treasury
Department, said while the city is substantially in compliance
with conditions the state set with Bing in November, Michigan
has not yet received a request for the money.
"If and when the city submits a draw request for funds, we
would begin the process of sending the funds to the city," he
The city of about 700,000 has been battered by a steep
decline in population, years of severe budget deficits and
escalating employee costs.
Since November, a majority of the nine-member city council
has gradually approved the series of goals or conditions,
including the hiring of companies to work on reform,
restructuring and legal matters, in an effort to stave off a
state takeover of the city.
In December, the state released $10 million of the bond
proceeds tied to the so-called milestone agreement after the
council dropped its opposition to the hiring of law firm Miller
Canfield to work on issues related to a 2012 consent agreement
that gave the state some oversight of Detroit's finances.
Despite action by the city council, the state also launched
a review last month of the city that could culminate in the
appointment of an emergency financial manager, who could
recommend Detroit file for bankruptcy.
In its ongoing effort to stave off a state takeover, the
city council voted 6-3 on Friday to reduce the pay of non-union
workers in Detroit's legislative and executive branches by 10
Mayor Bing, who had originally sought a 20 percent reduction
through unpaid days off, said the lower percentage was "adequate
at this time," with savings to the city's general fund estimated
at about $500,000 a month.
"We anticipate that we will furlough approximately 1,250
non-union employees, with no disruption in city services," the
mayor said in a statement.
Earlier this month, the council approved a one-year pension
freeze and a higher share of healthcare costs for non-union
workers as the city planned to negotiate similar cost-cutting
actions with its labor unions.