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Detroit on verge of bankruptcy... again

Detroit Mayor Dave Bing. An internal scuffle between Detroit's city council and the state of Michigan could drive the Motor City's budget into a big ditch.

Detroit is on the verge of bankruptcy once again. That’s the city itself, not its automakers, who are doing pretty well.

The city has a deal with the state of Michigan that’s supposed to avoid just this situation, yet Detroit’s latest cash crisis is over a rather petty dispute.

The state of Michigan helped the city borrow millions in bond money earlier this year, but the state is holding that money in escrow until Detroit meets certain conditions. One of them was that the Detroit City Council approve a contract with a particular law firm. They didn’t do that.

Detroit Mayor Dave Bing says, “The state is holding the cards at this point.”

Bing says the city could now run out of cash before the end of the year.

The mayor’s chief financial officer, Jack Martin, says Detroit will get through it one way or the other: “We’re planning at this point to implement additional cuts, to ensure that the city doesn’t run out of money.”

As of now, Martin says the plan is to make city employees take unpaid furlough days. Martin insists there’s one road the city absolutely won’t go down: “Bankruptcy is not an option.”

But as Detroit’s money woes continue, the word “bankruptcy” is popping up more and more in the Motor City these days.

About the author

Sarah Cwiek is a reporter who joined Michigan Radio in October 2009.

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