Detroit’s finances need a more thorough review that may lead to state intervention or a takeover, Michigan Treasurer Andy Dillon said.
The city of 714,000 is in “probable financial stress” and may run out of cash by April, Dillon said today in a preliminary state examination, citing more than $12 billion in long-term liabilities.
The report gives Governor Rick Snyder grounds to appoint a team to determine whether Detroit has a financial emergency, Dillon said in a statement. Dillon and Snyder have urged Mayor Dave Bing to agree to a deficit-reduction plan. One alternative is for the state to appoint an emergency manager with sweeping powers to fire employees and nullify union contracts.
“As we have noted on numerous occasions, the longer it takes to address Detroit’s financial problems, the more painful the potential solutions become,” Dillon said in the statement.
Bing said he expected the appointment of a state review team and intends to cooperate. The mayor said the best remedy is his cost-cutting plan, including proposed concessions by employee unions, according to a statement.
The city has a $155 million deficit that would increase by $44 million by June 2012 without spending cuts or more revenue, according to an independent analysis.
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