Skip to comments.Detroit to go bankrupt in less than a month
Posted on 11/21/2012 7:20:31 PM PST by Founding Father
The city of Detroit, facing a serious cash crisis, is set to go bankrupt by the end of this year and would put city workers on furlough unless it strikes a deal with the city council that would bring in $30 million before Dec. 14.
Detroit has been in financial turmoil for years, losing a quarter of its population in the past decade and facing a shrinking auto industry that has reduced tax revenues. The Detroit City Council gave the mayor the option to hire a financial advisor and in return receive $30 million by the end of the year.
But the Council on Tuesday voted 8-1 to delay the decision on the deal, which would pay the Miller Canfield Law Firm $300,000 to advise Mayor Dave Bing. The deal would have released $10 million in bond money on Tuesday and another $20 million in December.
The Council decided not to authorize the contract due to suspicions that Miller Canfield has conflicts of interests, since the firm handles other city business. The Council was also concerned that the firms contract may not be legal, since it was not prepared or approved of by the citys chief on-staff lawyer. Council members were also upset that Bing only presented them with one law firm, denying them options to choose from.
"The Councils rejection of the Miller Canfield contract means the city will not receive the first $10 million scheduled for release today, Bing said in a statement. As a result, it will be more difficult for the city to maintain its liquidity until the receipt of property tax revenues beginning in January. Todays vote is one more example of how City Council has stalled our efforts to bring financial stability to the city of Detroit."
Some blame the mayor for the denied funds, claiming that his limited options gave the Council no choice but to reject the proposal.
Why is Mayor Bing putting gthe citys finances at risk by marrying himself to one law firm? City Council President Charles Pugh told reporters.
If a deal cannot be struck within the upcoming weeks, then those who will suffer most are Detroits government employees. Bing plans to put city workers on furlough on Jan. 1 to save cash if fails to receive the much-needed money from the law contract. With a $30 million cash shortfall, the city would temporarily lay off thousands of workers to avoid bankruptcy. The only city workers who would be able to keep working are police officers, firefighters, EMS workers, or employees of departments that raise revenue for the city.
The City Council also rejected a proposed contract to overhaul the Detroit Water and Sewerage Department, proposing to cut 81 percent of its workforce in an attempt to save cash.
If we dont stop this, there will be nothing left of the city of Detroit, Michael Mulholland, secretary treasurer of the American Federation of State, Council and Municipal Employees Local 207, told the Detroit Free Press. With a city that has already lost much of its population due to declining jobs, cutting the workforce with furloughs and layoffs is only worsening the crisis. At the current rate, Detroit is set to hit a weekly cash flow of $4.1 million in mid-December and drop to negative $4.8 million at the end of the year.
It wasn’t already?
They fled the city. Who is John Galt?
Happy news for the Union’s...... A tribute to their contribution to the success of cities all across America.
I’ve visited Detroit as well as Third World cities in Africa,Asia and South America.I can tell Detroit from the others only because some of the signs there are in English.
Obamanation Communism File.
We’ve all heard this Broken Record for years now..............LET’s SEE some ACTION ON This!
Let the parasitic inner-city tribes starve in ALL the cesspools run by Democrats.
My only question:
WHAT TOOK SO LONG?
Let this guy write the check ---> Detroiters Elect Ex-Con Brian Banks As State Rep
Comparing Detroit to Hiroshima, then and now.
It’s like a robber putting the gun to his own head and threatening to shoot if you don’t give him all your money. From their perspective, it’s worked before, so why not?
Sounds as if city council members are upset that they’re not getting their cut of the fee to me. Might not be “legal” because staff legal counsel didn’t draw up the contract, lol?
They’re fighting about something over which they honestly have no control. All they’ve got on their side is guilt and fear of rioting, but the wheels just fell off the guilt wagon so the threat starts to look like what it’s been all along, blackmail.
Yes, it's always been a mystery to me that the media remains liberal despite their certain knowledge that liberalism breeds problems with attaining and maintaining economic prosperity. And they must know that a declining economy will affect their sales of newspapers, cable TV fees, and advertising income. Yet they continue to support liberals in politics. Go figure. Makes no sense to me.
Ok. What are the effects of bankruptcy?
No schools, no garbage collection, no police protection, no fire protection?
So basically, nothing changes.
They’d have to open their books, can’t have that.
The great symbiotic relationship between the unions and city government has proven to be a failure.
Too Big to Fail!
Well, "morally" bankrupt anyhow.