How we got here: The City of Detroit’s been paying bills by racking up more debt instead of making needed changes

Andy Dillon, Michigan State Treasurer

Deep revelations about the practices of city government have shed a light on a local government which has not had a positive year-end fund balance since 2004.

Here are four examples of areas, in the eyes of the review team, where the things could of been handled better.

Andy Dillon, Michigan State Treasurer

Andy Dillon, Michigan State Treasurer, at press conference announcing the fiscal findings

A $936.8 million dollar bill

Detroit City Government has been running on the municipal version of a credit card. Instead of making structural changes, city government continually loaned money (at junk bond status) to pay every day bills. Detroit’s General Fund deficit was $327 million in 2012. However, if you factor in the money they loaned over the last few years, the fund deficit would stand at $936.8 million, according to state officials. By kicking the can down the proverbial road and not making changes, the city now owes that money, with interest.

Detroit Police Discrepancies

Previously reported numbers about restructuring in areas like the Detroit Police Department, where officials reported 85% are doing police work as patrolmen or investigators, were called into question.

State Treasurer Andy Dillon said during the financial review press conference that “The interim chief … said 85% of police officers are doing the police work whether as patrolman or investigations, and then you meet with some other folks that have a much different number. Maybe 1/3rd are actually on the streets, and 2/3rds behind a desk.”

An interesting fact shared was that 65 Detroit Police officers, when the review started, were doing payroll.

Water and Sewer Department

This one, in some ways, affects the whole region as water rates have been going up.

At today’s press conference, Dillon reflected on a recent report and contract offer that stated the department only needs 19% of the workforce it currently has due to work rule changes and technology. Dillon said that “if only half” of those savings could be realized, then that money could be used elsewhere.

$199 Million Owed Detroit

36th District Court, which is funded by the city of Detroit, according to review documents, has accounts receivable to the city of Detroit for $199 million in fines, fees, and other costs related to parking violations, civil infractions, traffic violations, drunk driving and other misdemeanor violations. The court’s collection rate is only 12% of its regional counterparts. A large portion of that outstanding amount has been due for seven years or more.

Detroit Police Officers, City Workers Underpaid

However, the news is not all bad for employees. Fixing the city on the backs of the worker’s wages isn’t in the cards.

“I would acknowledge that Detroit Police officers are underpaid. That is true of all city employees. Detroit employees are not overpaid, and I think you would not look at fixing the city by further cutting wages, that’s not the solution I see as necessary,” Dillon said.


Social Media reaction to the Detroit Financial Crisis Findings

Storified by DetroitUnspun – The Detroit Regional News Hub· Tue, Feb 19 2013 20:00:33

With Detroit teetering on a possible emergency manager after today’s press conference on the city’s financial problems metro Detroiters have a lot to say about it. The reactions might surprise you.
So to recap: Detroit still broke. Titus Young still unemployed. And either Sparty or Oladipo is going down tonight. #Feb192013TruthsJames David Dickson
Detroit about to put into place an “Emergency Manager.” Sounds like a tipping point to me. #DetroitJacob Riggs
There’s no doubt about Detroit’s need for emergency managerAugustin Thompson
Detroit city council insists it can solve the city’s problems without an emergency manager. Any thoughts #backchannel ?Stephen Clark
@sclarkwxyz It’d be great if they could solve the issues on their own but the record doesn’t show their ability to get it done. #backchannelKeenan Gottschall
Rarely do I get 100% agreement on something. Is there ANYone out there who thinks Detroit can get itself out of trouble? #backchannelStephen Clark
SHOCKING that Detroit Council doesn’t want to talk about the financial review.angie
Wait they needed to have a report done to determine Detroit was broke? I could have told them that for free.Dylan Heiden
Did we really need a financial review to determine our city is broke and mismanaged? EFM is coming; bankruptcy is not. #Detroit #thoughtsNicholas Mukhtar
My sources in #Lansing have said that #Detroit will have a state takeover this is all just preliminaryHarvey Jennings II

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