(WXYZ) - Emergency Manager Kevyn Orr released his financial and operating plan to the state that reveals deep fiscal wounds and an impending cash flow crisis in the city of Detroit.
The report indicates that the city of Detroit will run out of cash this summer if the city’s current financial strategy is not maintained and adjusted.
“We’re in very dire financial straits. We need to make a huge change in our direction if we’re going to avoid tougher decisions down the road. That’s the key takeaway from this report,” said Orr's spokesman Bill Nowling.
Orr worked with Mayor Dave Bing, Detroit City Council, the State Treasurer and other government leaders to prepare the report which calculates the city’s total debt obligations.
The report states that the city of Detroit’s expenditures have surpassed revenues from 2008 to 2012 by an average of $100 million each year.
The unrestricted deficit at the end of fiscal year 2012 was $326.6 million with a $60 million addition looming by summer time, according to the assessment.
Additionally, the report shows that Detroit is projecting negative cash flows of about $90 million in the current fiscal year and would run out of money in June if the city doesn’t continue to defer payments.
Emergency Manager Kevyn Orr released the following statement about the report:
"The 45-day report I have submitted is a sobering wake-up call about the dire financial straits the city of Detroit faces. No one should underestimate the severity of the financial crisis. The path Detroit has followed for more than 40 years is unsustainable and only a complete restructuring of the city's finances and operations will allow Detroit to regain its footing and return to a path of prosperity. This plan offers baseline from which the real restructuring work can begin."
Nowling said last week that this financial report wouldn’t be specific to what the fixes are but will identify the problems that need to be addressed.
“The report is really the first step in sitting down with our creditors and to sit down with them and talk about how serious of a problem the city is in and the need to restructure the debt. One thing that’s clear in the numbers that have come out is we need some wholesale restructuring in both the finances and how government services are provided,” said Nowling.
To build a comprehensive, structured financial plan, the report says Orr intends to meet regularly with Detroit’s restructuring advisors.
The plan put forth by Orr is to ensure that the city of Detroit is able to provide governmental services essential to the residents of the city.
“This report is a detailed snapshot, but it’s a snapshot. It’s going to be changed and augmented over time. It’s going to be added to as the reforms and restructuring programs come online. Those are going to be added to the plan. It’s a living breathing document," said Nowling.
The emergency manager must have a public hearing within 30 days of issuing this report, so the public will have a chance to comment.
"We're going to take those comments to help make this report better. It's a collaborative effort," said Nowling.
READ THE FULL REPORT BELOW:
Mobile users, click here to view the report: http://www.scribd.com/doc/141009783/City-of-Detroit-Final-Financial-Operational-Plan-45-Day-Plan-2?secret_password=byxctjr4qii3x7w3gnm
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