Detroit Seen As Bankruptcy-Bound

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DETROIT, (UPI) — The city of Detroit is inching closer to bankruptcy by not following state recommendations, Michigan Gov. Rick Snyder said Thursday.

“To the degree that (Detroit officials) don’t do those things, they’re putting themselves closer to a path of essentially having a crisis that could result in bankruptcy,” Snyder said.

The Detroit News reported that the Motor City must meet state mandates in order to be given access to $30 million in state bond funding.

Snyder is refusing to soften the mandates at this point, the News reported.

If the city files for bankruptcy, it would be the largest municipality ever to do so in the United States. At that point, “the way the laws are now, it’s a really messy option,” said Kenneth Whipple, a member of Detroit’s Financial Advisory Board, which was created by Gov. Snyder and is charged with overseeing the city’s financial health.

Ed Rago, a former budget director for two Detroit mayors, Coleman Young and Dennis Archer, also said the city is likely to end up in bankruptcy.

“I’ve been saying from the beginning that it will end up in bankruptcy. My friends ask me, ‘What’s going to happen to Detroit?’ It’s going into bankruptcy,” Rago said.

Current city manager City William Andrews said Detroit can squeak by with spending cuts and restructuring for the short term. By May, however, the city will have to a deficit estimated at $46 million. At that point, the city will likely require state bond money to manage, Andrews said.

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