Gov. Jennifer Granholm Friday signed off on legislation allowing Detroit — and all Michigan cities — to issue up to $250 million of fiscal stabilization bonds to help eliminate deficits and pay off short-term obligations.
The state Senate approved the bill last week by a vote of 30 to 6. The House had earlier approved the measure by a vote of 75 to 30. The Detroit City Council approved the plan last November, saying the city would need to issue the debt by February to avoid running out of money.
The legislation raises the debt issuance cap in the 28-year-old Fiscal Stabilization Act to $250 million from $125 million. It also amends the act to allow state revenue aid to back the debt — a crucial move that Detroit officials said would increase the marketability of the city’s bonds.
The borrowing is part of Mayor Dave Bing’s deficit-elimination plan. The city plans to pay off the debt over 20 years.
Because Detroit is behind in turning in its latest audit to the state, it will need to secure the permission of the Michigan Department of Treasury to sell the debt.