DETROIT (WXYZ) - Detroit is in much worse financial shape than anyone has led us to believe. What we found is that Detroit is billions of dollars more in debt than what the state and city leaders have been saying.
When Michigan treasurer Andy Dillon met with the 7 Action News team and other media in Lansing last week, he was asked about the true debt figure - what Detroit has borrowed over the years and currently owes. In part, he attributed his answer to Conrad Mallet, one of the team members who are about to look closely at the cities financial picture.
"Our report shows the current bond debt at more than $12.3 billion," Dillon told us. Then he added a shocking revelation. "But Justice Conrad Mallet," referring to former State Supreme Court Justice Mallet, " says with the interest, it's more like 17."
Yes, $17 billion with a "B" dollars when you include interest. But the real figure is even higher, according to the Citizens Research Council, a non profit, non partisan "better government "organization that's been around for nearly a century - since 1918 to be exact.
The CRC puts Detroit's total debt at about $20 billion. That includes $5 billion to cover health care, dental and other promises for retirees in decades to come and a billion for the unfunded liabilities to pension funds.
"The city has made a lot of promises," says Bettie Buss, senior researcher for the Citizens Research Council. "Past leaders have entered into a lot of agreements; have made a lot of decisions that cost huge amounts of money. But, at the same time that its developed huge debts that go out to 2036 and beyond, revenues have been shrinking."
Bettie Buss worked in the city's budget department for many years, but has been the senior researcher at the Citizens Research Council for many more. Contract agreements made with Detroit's retirees require support years if not decades into the future - which must be part of projections at least 30 years out.
"And that's the crunch," Buss says. "You've got these obligations to bond holders, to former retirees, to current city employees, and the pie is shrinking. So the resources are declining, and yet there's all this debt and obligations for future payments hanging out there, and that's really creating part of the crisis."
Add up the principal and interest, Detroit's long term debt approaches a staggering $20 billion.
The governor's financial review team will be looking closely at the books in the coming weeks .and the Citizens Research Council also plans a deeper dive into the numbers.
What to do about what they find will determine Detroit's financial future.