EM's report finds no silver lining to Detroit's dark cloud - New York News

EM's report finds no silver lining to Detroit's dark cloud

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Detroit Emergency Manager Kevyn Orr Detroit Emergency Manager Kevyn Orr

Off the Chain Opinion

By Charlie LeDuff, FOX 2 News

DETROIT -- Why an emergency manager for Detroit? Because it's an emergency.

Consider:

Detroit city government spends twice as much per citizen ($3,741) than does the City of Los Angeles ($1,885).

Detroit's deficit may top $400 million this year on a budget of $2.6 billion. Los Angeles is struggling to close a $230 million deficit -- on a $7.2 billion budget.

Detroit spends more on cops per capita than Los Angeles but in 2012, Detroit (population 690,000) suffered 114 more homicides than Los Angeles (population 3.8 million).

Detroit government spends more on just about any jar it has its fingers in than its counterpart in Los Angeles.

So why does the city operate more like Lagos than LA? Because over the decades city leadership -- from the politicians to the union chiefs to the connected contractors -- have emptied the till.

The proof comes today as we get our first comprehensive assessment of the city's finances from the office of Kevyn Orr, Detroit's state-appointed emergency manager.  And it ain't pretty. Click here to read the full report.

"If you shut the city down and did nothing but collect taxes and pay the debt, you couldn't pay it down in 15 years," said Bill Nowling, the spokesman for Orr.

The document is not the cure, Nowling says, rather it is the diagnosis -- the first step toward financial health for the city and the well-being of its citizens, you hope.

Assets and debts are incorrectly valued. The books have been so thoroughly cooked they resemble a boiled shoe. The city pays for 20 different health plans. Benefits and retirement packages for city workers are unsustainable. And -- surprise -- Detroit routinely overpays for goods and services.

"The city has been robbing both Peter and Paul," Nowling said. "You can't read this report and say we don't need an emergency manager. You just can't."

 The true value of Detroit's debt and long-term obligations could be somewhere in the neighborhood of $16-$17 billion when it's all said and done.

What's more, the city will run out of cash by the end of June and if you add the vendors and pension funds that have been stiffed since last summer and paid with an IOU, Detroit has already run out of money. And come Christmas time, the city will have run out of accounting tricks and money all together.

The real savings will have to come from Detroit's creditors. Already 42 cents of every dollar goes just to paying Detroit's debts. You can't run a lemonade stand like that, much less a city.

If Detroit's creditors believe what Orr hands them Monday, it's the first step toward getting them to take a haircut because cutting wages and capital improvement to public safety isn't going to get us there.

If the creditors don't buy in, we're cooked.

You can take that to the bankruptcy court.   

 

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