Detroit’s Debt Crisis Even Worse than Thought, State’s Review Reveals

Detroit Free Press, December 22, 2011

A state financial report released Wednesday moved Detroit closer to appointment of an emergency manager and painted a bleak picture of a city digging an ever-deeper hole by taking on long-term debt to pay its everyday bills.

The findings by the Treasury Department trigger a more in-depth study by a team of state-appointed officials and set the stage for a possible consent agreement that would head off a state takeover.

City Council President Pro Tem Gary Brown warned that the city could be broke if it waits for Gov. Rick Snyder to name an emergency manager and called for immediate negotiation of a consent agreement.

“We need to give unions the motivation to accept meaningful cuts in health care and pension benefits before we are run into bankruptcy,” Brown said.

The new study can take 60 days, though Treasurer Andy Dillon said he would expedite it, as Detroit could run out of cash by April. The preliminary review could have taken 30 days but was done in half that time.


The report pegged the city’s long-term debt, including unfunded pension liabilities, at more than $12 billion. That’s $2 billion higher than Dillon’s estimate when he asked for the preliminary review earlier this month.


Last year, the city–whose three biggest revenue sources for its general fund total $538 million–spent more than $597 million just to make debt payments, the report said.


Under a bill Snyder signed into law in March, emergency managers may take near-total control of financially distressed cities and school districts and can amend or scrap union contracts. Under a consent agreement, there would be no emergency manager and local officials get increased powers to take corrective action. They can’t scrap contracts but could impose new ones when existing ones expire in June.

A petition drive is under way to have the emergency manager law repealed. That complicates the picture, because if the required signatures are certified, the law could be suspended from early next year until the November election. Snyder and legislative leaders may seek an interim replacement law.


In 2010, the city had net assets worth $265.1 million and long-term debts of $8.6 billion, according to the report and Treasury officials. This year, the value of the city’s net assets is a negative number, and its long-term debt exceeds $12.3 billion.


Opponents warned that state intervention will lead to community resistance.

“We are going to mobilize and continue to organize around this issue,” said the Rev. Charles Williams II, a civil rights activist who is helping lead an anti-emergency manager protest outside Snyder’s house in Superior Township on Martin Luther King Day next month. “We are going to send Snyder a strong message that we care about our communities and our democracy, and we won’t tolerate dictators in our community.”



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  • Question Diversity

    It’s worse than it initially appeared? Here’s the real scandal: Why the discrepancy between initial appearances and reality? The real scandal is that the stewards of Detroit City’s financial accounting were either grossly incompetent or blatantly deceitful. Enron went out of business for that sort of thing, and Arthur Andersen went out of business for blessing that obviously bad accounting in its “audits” of Enron.

  • ice

    Forget about knowing how to interpret profit and loss statements, balance sheets, depreciation and appreciation of real property the city might own, knowing how to maintain ledgers and journals, and the like, because I think their problems are much more basic than that, like maybe knowing how to add, subtract, multiply and divide.

    That’s an exaggeration, of course, but I’ll bet their inabilities aren’t far off from that.

  • Anonymous

    “We are going to mobilize and continue to organize around this issue,” said the Rev. Charles Williams II, a civil rights activist who is helping lead an anti-emergency manager protest outside Snyder’s house in Superior Township on Martin Luther King Day next month. “We are going to send Snyder a strong message that we care about our communities and our democracy, and we won’t tolerate dictators in our community.”

    This is probably the most telling (and certainly one of the funniest) paragraphs I’ve seen on AmRen in a long time. It’s as if the writer went out of his way to collect and summarize the ridiculous peculiarities that characterize black political behavior and opinions. I love that the esteemed reverend moonlights as a “civil rights activist” and has sicced himself on the Governor at the man’s home. The bit about Martin Luther King day is particularly funny/appropriate.

  • Anonymous

    As the “Reverend” Jeremiah Wright would remind us, “The chickens have come home to roost”!

  • Webspin

    The saddest part of this fiasco is the 700 million dollars a year Detroit receives from “those crackers” in the suburbs i.e. grants, state revenue sharing, and exclusive rights to host casinos and tax them. What do those “crackers” get in return? Crime.

  • Ben N Indiana

    This is the future of America, with one notable exception: There will be no one to bail us out.

  • Ferd

    Who is providing the debt so Detroit can pay its bills? It is hard to imagine that an investor would really buy their bonds.

  • Soprano Fan

    The Rev. Charles Williams says “we won’t tolerate dictators in our community”. What he really means is they won’t have whitey tell them how to run Detroit. Or anyone else, who is not a Bantu.

    On the other hand, Williams and his ilk voted for the likes of Coleman Young and Kwame Kilpatrick time and again.

    More and more, I get the impression that Bantus don’t care what other Bantus to to them, as long as it’s a Bantu who’s doing it. That’s the MOST IMPORTANT thing. For example, if Bantu Kasavubu Washington shoots and kills Bantu Tavarious Africa because Africa “disrespected” him, it’s OK. The Bantu community at most will call for “gun control”.

    But if Tavarious Africa were shot and killed by police officer William Kwasniewski, while trying to rob a liquor store, all hell would break loose. The city would burn.

    If you think that’s far-fetched, consider: When the Nigerian regime slaughtered hundreds of thousands of Christian Bantus trying to form a “Republic of Biafra”, Bantus in the U.S. were unconcerned. All their anger was directed at the South African and Rhodesian regimes. The same thing with Uganda under Amin, the civil wars in Rwanda and Burundi and Sudan. American Bantus were not overly concerned about those things. Susan Sarandon showed more concern over the slaughter in the Darfur region of Sudan, than Oprah Winfrey did. That’s a fact.

    If I were Gov. Snyder, I would do absolutely nothing about this. If Dave Bing thinks his plan will work, then so be it. Then, when Detroit gets flushed down the drain, Gov. Snyder can say he kept his hands off, because he thought Bing would correct the situation. It’s not like it’ll cost him votes – I doubt that 3% of Detroit Bantus voted for Snyder. Bing will get the blame for Detroit’s collapse, because it happened on his watch.

    It’s deliciously ironic- Detroit’s NBA team will still collect millions in salaries, while the rathole city they play their home games in, is stewing in its own financial juices.Do you think they give a flying duck about the city? I don’t.

  • Anonymous

    “Opponents warned that state intervention will lead to community resistance.” Translation from Newspeak to English: If we don’t get our way we will riot.

    “We are going to send Snyder a strong message that we care about our communities and our democracy, and we won’t tolerate dictators in our community.” Translation from Newspeak to English: Youze honkies is supposed to pay da bills, and we gets to spends da money.

  • proactive

    This is absolutely no surprise since I’ve witnessed Detroit’s decline when its first Nubian Mayor, “King” Coleman Young, engaged his tragic-comedy of gross incompetence when he was voted in office. A majority of black and liberal white voters happily established his tyrannical throne back in the 70’s.

    The politics of racial resentment thrown around by Young combined with a servile following of mindless black voters who couldn’t – and still can’t – see past their noses along with blacks preying on anyone who drew a breath in that now third world dump got Young’s wrecking ball going.

    Then the bruthas and sistas in charge added mega-high city taxes and business regulation which really established the social cancers its feeling now, and no higher government oversight of any kind left the chocolate kids in charge free to kill Detroit. When the state gets stuck trying to revive it with tax money, look for the black chorus screaming “racism” all the way to their now rotten rooftops.

    And by the way, it’s called DIEtroit now, for many terminal reasons.

  • Englishman

    Have a look at the debt of the “white” governments of the “white” nations! Astronomical to the point of the Big Bang next year?

    Do any of you watch Max Keiser on Russia Today TV?

    My big fear is that economic collapse will revive the Left and its black+white revolutionaries, rather than allow productive whites to escape from universal usury, destructive multi-racialism and dysgenic “welfare” rackets.

    Parasites won’t make paradise!

  • Tom Iron

    Here in NJ, we have multiple Detroit like municipalities. We’ve got Newark, Asbury Park, Long Branch, Elizabeth, Trenton, Paterson, etc, and the “winner,” Camden. Nothing helps. If the state of Michigan were smart, they’d stay away from a mess like Detroit. Just let it float off into oblivion. If they try to get into the day to day running of the place, they’ll just incur more cost to the taxpayers with no way of lifting those Detroiters up from the mess they’ve made. We already know that here in NJ. The state just last year gave up on Camden and pulled out.

  • Howard W. Campbell

    Good! Now, let’s start with pulling all federal and state funds from this sinkhole. Force the leaders of Detroit to solve their own problems without making everyone who lives north of 8 Mile or west of the city to chip in. I’m waiting for the leaders of Detroit to try to use the UN to force Windsor, Ontario to help out with the rebuilding of the motor city. They are 10 miles apart, but Windsor is clean and tidy. Detroit looks like Beirut on a bad day. Gee, I wonder why that is the case?

    There is a web site out there that compares Detroit and Hiroshima 65 years after Enola Gay. It’s amazing what a city can (and can’t) do when you have reasonably bright people running the show. I’m sure losing the auto industry hurt, but other places have retooled to make life attractive for businesses. Funny how not one foreign auto manufacturer has set up a plant in the state of Michigan.

  • rjp

    The employees of this city have been gorging themselves and their pocketbooks for years, this isn’t some recent turn of events so I hope to hell we aren’t going to bail it out just because it is a blackened city.

    Honestly, there should be clawbacks. Any person that ever had sign-off ability on a payment should face a personal audit — let the $60k per year employee explain the two Escalades in the garage. Audit every vendor. Audit each and every firm that did business with the city — find out the true owner and the bids that were entered by competitors not awarded the job — if was lower, clawback.

  • Jeddermann.

    There was a listing in the most recent edition of the National Geographic of the dozen most influential cities in the world. Need I say that Detroit was not among them. I would have to think that at least in 1945 Detroit WOULD HAVE BEEN listed among that top dozen cities because of the auto industry? This might be so? NOT NOW! The mighty have fallen and big time. Recall too that Detroit was laid out and designed as the first city having the automobile and the primary means of transportation. The first MODERN CITY? Back to nature now. They do have nice new sports venues however.

  • Mr.White

    Things are always worse than they appear when bungling blacks and hispanics are in charge. Detroit is a nightmare, but Los Angeles with la raza at the helm cannot be far behind.

  • ky boy

    al sharpton is participating in the MLK day march in michigan–he will add his economic and political expertise!

  • Anonymous

    jackson just stated that he will organize riots if they proceed

  • Anonymous

    Somewhere, in Detroit, the last liberal white guy that hasn’t moved is standing there scratching his head, wondering where all the white people went and then chiding himself for lapsing into racist though. Whereupon he goes home to his black wife and flogs himself. Then he strips naked and cries in the shower, curled up in fetal position, sobbing uncontrollably. Then, while his wife’s out cheating on him and he’s alone by himself, he logs onto Amren and writes “Racism’s not cool!”, then he goes back to the shower and cries again. And his wife comes home…pregnant.

  • Anonymous

    Why couldn’t Rosa Parks’s corpus have been enshrined at Detroit city hall instead of in DC? Americans should constantly point to Detroit as a model for African democracies. Nelson Mandela should give Detroit his Nobel prize to put on display. Foreign dignitaries should be given free tours of Detroit.

  • Whirlwinder

    Rev. Charles’ kind of ideas have been running Detroit into the ground for some 60 or so years. I say, excise Detroit from the state and let the good reverend, Al Sharpton & Rev. Jackson have their way with Detroit.

  • Anonymous

    Jesse Jackson says civil disobedience a possibility; article below

  • June Warren

    Just to give one example of how corrupt Detroit is, one only has to look at the library.

    Here in Tuscaloosa, Alabama we have a relatively small but very efficiently run and HEAVILY used public library. The average item of circulation, a book, e-book download, DVD, etc. only costs about $4.00. That’s obtained by dividing the library budget by its circulation. By contrast when you do the same for Detroit, the figure is an ASTOUNDING $41.00 per item!

    Any of you from Detroit suburbs can make the same comparison. Simply do a Google search for your local library’s budget and circulation numbers and see how they compare to Detroit’s.

  • Ciccio


    All those figures show is that the people of Detroit don’t read. If there are twenty guys going to the library to get out of the cold and only one of them takes out a book it means the costs of each item is twenty times the costs of of those in a library where where twenty people go in to borrow a book.

  • Anonymous

    Gov. Snyder should listen to the threats and not send in the emergency manager. Let them rot. If only Detroit had listened to Thomas Sowell and Sean Hannity and instituted “conservative fiscal policies”, all would be well there, right?

  • Anonymous

    Why are White people tying themselves into knots because they are making such a mess of the city? I would say, no white manager lifting a finger to clean up the mess. Leave them be, and if I had anything to say, no money.

    What they do, how bad they fare in school, etc. etc.,etc. I could not care less. It is Whites and their foolishness that worries me.

  • Michael C. Scott

    “…Los Angeles with La Raza at the helm can not be far behind.”

    –Mr. White (16)

    It isn’t far behind, but it’s the entire state of California that’s going bankrupt, rather than just Los Angeles. One of the latest idiot moves in California is a rehash of class warfare – the usual “soak the rich” nonsense. Kim Kardashian was singled out recently for not paying “enough” state income taxes. The problem with this whole approach is that California’s wealthy can simple relocate to states like Florida and Texas – which have no income tax – something California’s corporations have been doing for decades, in order to escape the nation’s highest state corporate taxes.

    California isn’t far behind Greece, where the national railroad system was taking in $100 million in revenues per year, while paying out $400 million in employee salaries. To escape monthly salary caps on government employees, the Greek railroad was paying its employees for more than 12 months each year – i.e. for months that do not exist. Similarly, some banks were refusing to accept California state IOUs.

    Unlike Portugal and Greece, California does not have German taxpayers to bail them out, and the US feds can not hope to borrow money from China as fast as states like California and cities like Detroit, Camden, Newark will flush that same money down the toilet. Financial involvement in these places by the feds can obviously only go so far. We’ve passed the tipping point. On a roller-coaster some folks will scream and close their eyes while others will sit back and accept the ride for what it is, but everyone has one thing in common; nobody gets off until the ride is over. We might as well enjoy this: (1) the left is suffering more than we are, (2) attempts at increased government intervention will make the problem worse, rather than better – which will hurt the left even more, and (3) it’s not like we can do anything about it except keep our personal finances in order and an emergency supply of food on hand (flour, dry noodles, dry beans, split peas and lentils, crackers, peanut butter, etc.)