June 5, 2014 / 9:16 PM / in 4 years

Detroit City Council OKs budget, art transfer

June 5 (Reuters) - The Detroit City Council unanimously approved a fiscal 2015 budget on Thursday amid warnings that the spending plan could change as the city winds it way out of U.S. Bankruptcy Court.

Kevyn Orr, Detroit’s state-appointed emergency manager, crafted the budget, which is part of a three-year spending plan he based on assumptions in the city’s proposed debt adjustment plan and revenue estimates agreed to by city officials in February.

“This budget is very fluid,” said Irvin Corley, the council’s fiscal analyst, noting that changes in the plan would lead to budget amendments.

Orr’s spokesman, Bill Nowling, agreed, calling the spending plan “essentially a placeholder budget until the plan of adjustment is confirmed.”

Detroit’s latest version of its plan to adjust $18 billion of debt and other obligations and exit the biggest municipal bankruptcy in U.S. history is pending before a U.S. Bankruptcy Court judge, who has set a July 24 start date for a trial on its fairness and feasibility.

Orr’s general fund budget totals about $937 million for the fiscal year that begins July 1, with all-funds spending at $2.41 billion.

The city council also unanimously voted to support a transfer of city assets at Detroit Institute of Arts to a nonprofit corporation.

The debt adjustment plan seeks to prevent a sale of artworks to raise money to pay Detroit’s creditors through a so-called grand bargain that taps funds from philanthropic foundations, the art museum, and the state of Michigan to ease pension cuts for city retirees.

The council’s power has been largely depleted in the wake of Orr’s March 2013 appointment to run the city. (Reporting by Karen Pierog)

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