Detroit financial crisis: What's next?
Updated On: Jan 08 2013 10:39:42 PM EST
A state of Michigan audit of Detroit’s financial crisis is complete and expected to go to the governor by the end of this week.
The audit of city finances shows Detroit operating at a deficit of $327 million.
Needed structural reforms have not been quick as the city continues to hemorrhage money. Detroit teetered on total insolvency at the end of December but the state of Michigan ponied up the cash to get the city through the month.
That triggered another state review of Detroit's finances. A decision on what happens next is expected shortly.
"I think the review team, maybe on the 11th or so, will go back to the governor with a recommendation. With that recommendation it will be incumbent upon the governor to make the decision as to whether or not to bring somebody in or to let us keep going forward, " said Detroit Mayor Dave Bing.
There basically are three options on the table:
1. Continue status quo -- unlikely
2. Appoint an emergency manager -- maybe
3. Amend the current consent agreement -- probable
Why is the amendment a probable course of action? Because it would allow the city to hobble along until March 2 which is when the state's new emergency manager law will take effect. That puts the future direction of Detroit in the hands of its elected leaders.
The state would declare a financial emergency exists in the city and the mayor and City Council would decide whether to go to the emergency manager or the nuclear option: bankruptcy.
Special section: Detroit in financial crisis