CHICAGO — “Bankruptcy is not an option” and Detroit is not going to run out money or miss a debt payment by the end of the year, the city’s chief financial officer said Wednesday.
CFO Jack Martin made the comments with Mayor Dave Bing at an afternoon press conference held a day after the Detroit City Council voted to reject a legal contract with Miller, Canfield, Paddock and Stone, PLC that the state said is required to win release of $30 million of bond proceeds from a state-controlled escrow account.
The legal contract is one of three measures that state Treasurer Andy Dillon said last week would be required for the state to release the money.
The state had planned to release $10 million Nov. 20 and $20 million on Dec. 20. Without the council’s approval of the legal contract, however, the state will not release the money.
City officials had recently said Detroit could run out of money by the end of the year without the money. But Wednesday Bing and Martin said they believe they can offset the $30 million loss with unpaid furlough days and other cuts starting Jan. 1.
“These actions are necessary to keep the city from falling into further financial distress,” Bing said.
“There will be no payless paydays and no missed debt payments. Unpaid furloughs should do it,” Martin said.
“Bankruptcy is not an option,” he added in response to a reporter’s question. “We’re not dealing with bankruptcy whatsoever.”
The city council said it rejected the three-year, $300,000 contract because of conflicts tied to the firm’s role in helping craft the state’s now-overturned emergency management law, Public Act 4, and the city’s financial stability agreement with the state.
But the city’s program manager, William “Kriss” Andrews, who is charged with overseeing the agreement, said the firm was chosen precisely because of its knowledge of the law.
“The city of Detroit chose Miller because of their expertise and because of what they knew about PA 4, and we do not see a conflict there,” Andrews said at the press conference.
Bing said he was “very frustrated” by the council’s rejection, and that the city would continue to work with Miller Canfield for now, which advises the city on its agreement with the state.
“I am not going to be dictated to by council or anyone else who’s going to be legal counsel,” he said. “We’ve been working with Miller for 18 months and I think they’re positive.”
The mayor termed the council’s rejection as yet another bump in the road blocking the city’s progress.
“I’m interested in one thing, and that is to make sure our city is fiscally stabilized,” he said. “All of these other issues take us away from our focus.”