Detroit Mayor Dave Bing told the City Council last week that contrary to earlier projections, the city would not run out of cash by April.
Bing presented the council with a spending plan that he said would allow the city to avoid a state takeover.
The presentation came a week before a state review team was set to hold its first meeting to look at the city’s books. That meeting was set for yesterday. The team will determine if Detroit faces enough fiscal stress to require the state to appoint an emergency manager.
A late 2011 report by Ernst & Young LLP predicted that the city would be broke by April.
Bing repeatedly invoked the report as Detroit negotiated with unions, and state officials cited it as they began an investigation into the city’s finances.
But Bing last Thursday said that new revenue and cuts would mean that Detroit would not run out of cash by April, though it would likely end the fiscal year with a $45 million cash deficit.
The mayor’s plan calls for $360 million in cuts, about half of which would come from yet-to-be won union concessions.
Bing proposed outsourcing management of the Detroit Department of Transportation, cuts in vendor payments, a $15 million payment from the Detroit Public Schools for overdue electrical bills and 1,000 layoffs that will take effect by the end of February. The mayor has also proposed raising the corporate income tax to 1.9% from 1%.
Several council members expressed skepticism that the cuts would materialize. “It doesn’t seem realistic to realize these kind of savings,” Ken Cockrel Jr. said.
Bing said the state review board was not going to find anything that the city has not already told them.
“Do we have financial stress? Damn right, we do,” he was quoted as saying in local reports. “It’s been like that from day one.... It is what it is.”