Despite shifting the focus towards the coming elections and all kind of news regarding an improvement in economy, there still are crisis occurring throughout United States. It is the case of the city of Detroit, which according to a warning from the Michigan Treasurer, will run out of Money in four months.
There’s been some media coverage about this story a few months back, but at that time the situation didn’t seem so urgent, as local authorities said there’s no way the city will be allowed to come close to a default. However, interesting enough is that the default has been, in part, caused by the local authorities’ inability to come to an agreement regarding deficit-cutting measures.
Now, according to Michigan Treasurer Andy Dillon the city of Detroit will run out of money in May, instead of April after spending changes made by city officials. Dillon made the statement after a two and half hour meeting with the 10 member team appointed last month by Governor Rick Snyder on concerns about “probable financial stress”. The issue at hand was whether the city needs an emergency manager or not.
Yesterday, the team met for the first time. They had to come to terms with a situation where Detroit faces a nearly $200 million general fund deficit for 2011 alone and an increasing debt. Detroit’s Mayor Dave Bing is promoting an 18 month plan that would save $102 million through June and $258 million in 2013.
As stated by Andy Dillon, Detroit’s most urgent matter is to stop escalating retiree health care costs and take care of all the debt and interest costs. The Treasurer also mentioned that the team he’s a member in met both with a “sense of urgency” as well as “anger” because nobody knew how bad the situation was.
Despite facing with a potential crisis, the Michigan Treasurer said he remains “cautiously optimistic”, explaining that if city and union officials come to an agreement by early February, Detroit will find some relief. “I think there’s a very good chance that they are able to cut a deal on their own and that this review team’s work could be suspended”, he said.