Detroit is in a cash-flow crisis, making it "insolvent" and hindering its ability to borrow more money to cover its $15.6 billion in debts, which are worsened by missed pension and healthcare payments for retirees.
In the first report delivered Sunday on the city's financial standing to Michigan state officials, new Detroit Emergency Manager Kevyn Orr called the massive debt and long-term liabilities "a sobering wake-up call about the dire financial straits the city of Detroit faces."
Citing the report, The Detroit New
s said Sunday the city made $133 million in debt payments last year out of a $1.23 billion budget, is carrying $5.7 billion in unfunded healthcare costs for retired and active city workers, and is facing a $326 million deficit expected to increase by $60 million before the end of the fiscal year on June 30.
"No one should underestimate the severity of the financial crisis," Orr said in a statement Sunday.
Orr has said previously that he hopes the city can avoid having to file for bankruptcy. But to that, his report leaves open the possibility of further pay cuts for city employees and further cuts in payments to Wall Street bondholders and to healthcare costs as well.
"We're going to be out of money by the end of the year," Bill Nowling, Orr's spokesman, told the News. "If all we did was collect taxes and pay our debt, we couldn't pay it off in 20 years. That's the situation that we're in now."
Advanced copies of the report were sent to Detroit Mayor Dave Bing and to Michigan GOP Gov. Rick Snyder, who appointed Orr to help straighten out the city's finances.
© 2015 Newsmax. All rights reserved.