Emergency Manager Paints Bleak Picture of Detroit

Kevyn Orr said the city faces huge debt and pension costs.

Posted: 05/13/2013 11:24 AM EDT
Kevyn Orr

Detroit’s emergency financial manager painted a portrait of the city’s fiscal health that was decidedly calamitous, saying it was "dysfunctional and wasteful" and that it would take far more work to set right the finances of the Motor City.

In a report that is written to be given to Michigan’s treasurer, Kevyn D. Orr said that the city faced long-term debt of at least $15 million and a low credit rating that will make it challenging for Detroit to borrow money.

“No one should underestimate the severity of the financial crisis,” Orr said in a statement released by his office. “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.”

Dave Bing, the mayor of Detroit, said he had not read the complete report and that he and his staff were still studying it.

“However, my initial review is that the assessment by Mr. Orr of the city’s financial condition is consistent with my administration’s findings,” Bing said, in a statement. “A complete and comprehensive evaluation of the manager’s report will be conducted over the next 24 hours, and any further comment will be reserved until that review is completed.”

Orr was appointed to the position by Michigan Gov. Rick Snyder in March amid controversy. Many Detroit elected officials and community activists said that the city could manage its fiscal affairs without a takeover by an appointee of the state’s Republican governor.

The state mandates that the emergency manager file an initial report within 45 days of assuming the position. Orr’s report portrays the state’s largest city as one where costs for retirees far outpace the payroll for city workers. Indeed, retiree benefits consume about a third of Detroit’s budget, the report said. In addition, it indicates that public services have suffered in the last few years in Detroit, which has continued to lose population and tax revenues.

Orr is an attorney in the Washington office of Jones Day who has experience in bankruptcy law. 

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(Photo: REUTERS /REBECCA COOK /LANDOV)

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