Source:Reuters / NBC News
Michigan’s biggest city is “clearly insolvent” and needs many fixes including to its pension system and labor agreements to addresses its problems, according to a report outlining the state of Detroit’s finances.
“The City of Detroit continues to incur expenditures in excess of revenues despite cost reductions and proceeds from longterm debt issuances,” the city’s recently installed emergency manager, Kevyn Orr said in his first report. “In other words, Detroit spends more than it takes in – it is clearly insolvent on a cash flow basis.”
Detroit had only $64 million in cash on hand and current obligations of $226 million on April 26, 2013-a negative net cash position of $162 million, the report said.
Operating expenditures have exceeded revenues by about $100 million a year since 2008, according to the report. The city had an accumulated $326.6 million unrestricted deficit.
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