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r3020
Senior Advisor

Detroit insolvent

Progressive city run by progresses for nearly a century. Why don't they just raise taxes and create untold wealth?

 

snip-

Emergency Manager Kevyn Orr says the city of Detroit's cash-flow crisis makes it "insolvent" and unable to borrow more money to mask over debts being made worse by skipping millions in payments for retiree pensions and health care.

After 45 days on the job, Orr's initial assessment of Detroit's perilous finances is laid bare in a 41-page report to be delivered today to state Treasurer Andy Dillon.

Calling it "a sobering wake-up call about the dire financial straits the city of Detroit faces," Orr said he will use the report as a baseline for paring down the city's $15.6 billion in debt and long-term liabilities.

Orr, a Washington, D.C., bankruptcy attorney, did not use the word "bankruptcy" anywhere in his report but said the city is "insolvent" and has "effectively exhausted its ability to borrow" after years of issuing long-term debt to pay its bills. Previously, he has said he hopes to avoid a Chapter 9 filing.

The report hints that city employees who were not hit by last year's wage reductions could face pay cuts in the near future and that Wall Street bondholders will be asked to take a haircut to relieve a city that shelled out $133 million in debt payments last year on a $1.23 billion budget.

Orr also says he will evaluate "options to reduce or eliminate certain health care costs for both active and retired employees" in light of a $5.7 billion unfunded health care benefit for 18,500 retired city workers and 10,000 active employees.

"No one should underestimate the severity of the financial crisis," he said Sunday in a statement.

From The Detroit News: http://www.detroitnews.com/article/20130512/METRO01/305130320#ixzz2TBEZaVVr
3 Replies
Craig's Brother
Senior Contributor

Re: Detroit insolvent


@r3020 wrote:

Progressive city run by progresses for nearly a century. Why don't they just raise taxes and create untold wealth?


Raise taxes on whom?  Nobody in Detroit pays taxes now.

 

So who is Kevyn Orr?  This is his picture (and yes, it speaks volumes).

kraft-t
Senior Advisor

Re: It would seem to me

that the city of detroit is mostly financed  by real estate taxes and sales tax revenues. City taxes are generally not related to income taxes.

 

That being the case, most peole that still own their houses pay their real estate taxes. And renters indirectly pay real estate via their monthly rent check. So those people are paying their taxes for the most part.

 

Secondly detroit has been hit particularly hard by the financial meltdown with jobs lost homes lost. Expenses still go on even though revenues decline. Lets not forget the automakers that exited the metro area.

 

So you might just give a little blame to wall street the financial market and the corrupt banks. There is not an easy way to resolve detroits problems as many operating costs still exists and the residents there as impoverished as they are still need city services and still need public schools.

Craig's Brother
Senior Contributor

Re: It would seem to me


@kraft-t wrote:
That being the case, most peole that still own their houses pay their real estate taxes. And renters indirectly pay real estate via their monthly rent check. So those people are paying their taxes for the most part.

You mean these?


kraft-t wrote:

Secondly detroit has been hit particularly hard by the financial meltdown with jobs lost homes lost. Expenses still go on even though revenues decline. Lets not forget the automakers that exited the metro area.


You mean because of these?


kraft-t wrote:

So you might just give a little blame to wall street the financial market and the corrupt banks. There is not an easy way to resolve detroits problems as many operating costs still exists and the residents there as impoverished as they are still need city services and still need public schools.


That's right, in classic liberal fashion, blame everyone but the Black people who are actually responsible.