The Detroit News is reporting that Emergency Manager Kevyn Orr says the city's cash-flow crisis makes it "insolvent" and unable to borrow more money to cover its debts. The situation is being made worse by the skipped millions of dollars in payments to retiree pensions and health care plans.
Detroit Mayor Dave Bing, who, along with Michigan Gov. Rick Snyder, received an advance copy of the report, said in a statement on Sunday that his office hadn't yet conducted a "comprehensive review" of the report. Orr's findings were consistent with his administration's assessment of the city's financial situation, however.
After 45 days on the job, Orr's initial assessment of Detroit's perilous finances is laid bare in a 41-page report to be delivered today to state Treasurer Andy Dillon.
Calling it "a sobering wake-up call about the dire financial straits the city of Detroit faces," Orr said he will use the report as a baseline for paring down the city's $15.6 billion in debt and long-term liabilities.
Orr, a Washington, D.C., bankruptcy attorney, did not use the word "bankruptcy" anywhere in his report but said the city is "insolvent" and has "effectively exhausted its ability to borrow" after years of issuing long-term debt to pay its bills. Previously, he has said he hopes to avoid a Chapter 9 filing …
Orr also says he will evaluate "options to reduce or eliminate certain health care costs for both active and retired employees" in light of a $5.7 billion unfunded health care benefit for 18,500 retired city workers and 10,000 active employees.
"No one should underestimate the severity of the financial crisis," he said Sunday in a statement.
Read more at the Detroit News.