Forum Post: Another example of why cities are going broke - Detroit emergency manager says city 'clearly insolvent'
Posted 1 year ago on May 13, 2013, 8:51 p.m. EST by Stormcrow2
This content is user submitted and not an official statement
By Nick Carey and Steve Neavling
(Reuters) - Detroit is clearly insolvent and could face a possible bankruptcy if talks with labor unions and creditors do not make substantial progress on easing the city's cash crunch, the city's emergency financial manager said on Monday.
In his first official report, Emergency Financial Manager Kevyn Orr presented a grim view of Detroit's problems.
The city faces a $162 million cash shortfall because of pension deals that outstrip its ability to pay, and a $60 million operating deficit, all amidst a cityscape of abandoned homes and businesses, broken streetlights and fractured services, the report said.
Operating expenditures have exceeded revenues by about $100 million a year since 2008, Orr's report found, bringing the accumulated unrestricted deficit to $326.6 million.
Payments of Detroit's long-term debt are eating up nearly 20 percent of Detroit's budget.
Pension payments to city workers are one of the largest drains on the city's finances.
Detroit will make $31 million in pension payments this year, but will defer another $108 million.
The city also has $5.7 billion in unfunded retiree benefit obligations, more than previous estimates, the report found