Is Detroit dead?
Detroit, Michigan is facing a $ 300 million deficit, a cash flow shortage of $ 60 – $ 80 million and is bleeding $5 million a month as revenues fall in the Motor City. This according to former City Chief Financial Officer Joe Harris (Detroit News, August 27)
The dismal situation facing the city could very well mean that the only way out is to file bankruptcy, according to Harris.
Mayor David Bing says the only way he can see the city avoiding bankruptcy is to lay off 1,000 city workers. He began with a layoff of 205 last week. But, unless there is further action the city could run out of cash in late October. That would mean it could not meet payroll.
Unions representing city workers are not happy and sounding militant and the Mayor has received complaints from the public about budget cuts already made. Casino revenue has been a good source of city revenue for the last decade, something that has been very important as the auto industry has slumped. But Detroit has one thing in common with Las Vegas – casino attendance and revenue is down in this economy, so that is making things even worse.
In spite of this dismal news and outlook, the Detroit News reports that Bing is running for re-election in November. That could also be the month the city runs out of cash and may have to file for bankruptcy.
There has been a lot of news of recent about Clunkers – older gas guzzling autos of little value. The City of Detroit may soon reach the status of Municipal Clunker. Unfortunately, before this world-wide economic slump is over there may be numerous Municipal Clunkers, and perhaps a State or two also.
Detroit is likely not to be alone, if it is dead or not or will rise again will be decided sometime in the future
Bankruptcy may be the beset option for a future, remember New York.