Detroit’s city council reversed course Tuesday and voted to increase water and sewer rates.

CHICAGO - The Detroit City Council Tuesday voted to raise water and sewer rates, reversing an earlier vote that city and state officials had warned could bring additional state oversight down on the city.

The council voted 5-4 in favor of the controversial resolution after hours of debate and testimony.

The council had voted on June 30 to reject the 7.5% water and sewer rate increase. After the move, city and state officials, including Michigan Treasurer Nick Khouri, warned that rejecting the rates would mean the loss of $27 million out of a $79 million budget.

The shortfall could trigger action by the state-appointed review board that oversees the recently bankrupt city's finances, Khouri warned.

A no vote would also endanger final negotiations of the Great Lakes Water Authority, a bond-issuing body that is poised to take over the Detroit Water and Sewerage Department. The deal still needs bondholder approval, and that might be difficult to win if there's a large budget shortfall, Detroit chief operating officer Gary Brown warned the council Tuesday ahead of the vote.

"If it doesn't get done by Jan. 1 it falls apart," Brown told the council. "If you don't approve the rate increase, the layoff notices are going to be going out," he added. "We need the rate increase in order to move forward and invest in this system."

The rate increases are needed in part because the city of Flint last year pulled out of the DWSD.

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