Detroit mayor announces 'next steps' for city's cash crisis

City will implement unpaid furloughs, other cost saving actions on Jan. 1

Published On: Nov 21 2012 11:26:50 AM EST   Updated On: Nov 21 2012 05:39:33 PM EST
Detroit Mayor
DETROIT -

In a press conference on Wednesday Detroit Mayor Dave Bing addressed the cash crisis in the city.

The mayor said the city has failed to meet the first milestone in the agreement with the State.

With the second milestone looming the mayor says his administration will take steps needed to offset the anticipated $30 million cash shortfall.

To compensate for the deficit the mayor says the city will implement unpaid furloughs and other cost saving actions as of Jan 1st.

"Again, these actions are necessary to keep the city from falling into further financial distress," Bing said. "Most importantly, I want our citizens to know that public safety will not be jeopardized"

The mayor said revenue-generating departments will not be impacted by the cost-cutting measures.

The city is still deciding the number of employees to see furloughs.

"We will not run out of money," said city CFO Jack Martin. "Bankruptcy is not an option."

Detroit City Council members on Tuesday took no action on a contract required by Michigan for the city to get cash needed to pay its bills.

The Council voted 8-1 to delay a decision on the deal that would pay the Miller Canfield law firm $300,000 to advise Bing on financial matters.

Bing says the delay means the state won't release $10 million in bond money and that "it will be more difficult for the city to maintain its liquidity" until Detroit collects property taxes in January.

"The state has made it very clear that if the city of Detroit did not meet all three milestones as outlined in our agreement, money from the city’s escrow account would not be forthcoming," Bing said in a statement. "The Council’s rejection of the Miller Canfield contract means the city will not receive the first $10 million scheduled for release today.  As a result, it will be more difficult for the city to maintain its liquidity until the receipt of property tax revenues beginning in January. Today’s vote is one more example of how City Council has stalled our efforts to bring financial stability to the city of Detroit."

City Council President Charles Pugh took offense to the mayor's comments.

"For (Bing) to suggest that we are an obstruction as Council really pisses me the hell off," Pugh said. "If the mayor was concerned about getting this $10 million then he should never have tied it to the Miller Canfield contract."

The contract is one of several milestones tied to the city's financial overhaul plan.