Michigan and Detroit agree on deal to help city's deficit

A view of downtown Detroit s shown March 23, 2011 in Detroit, Mich. The city is facing a big budget deficit, and just agreed to a deal with the state of Michigan to help dig its way out.

Stacey Vanek Smith: The city of Detroit has a projected a deficit of more than $200 million his year -- and it could run out of money by June.  Last night, Detroit's city council narrowly passed a controversial deal with the State of Michigan.

Marketplace's David Gura reports.


David Gura: In addition to Detroit's deficit, the city is on the hook for billions -- money it has promised current and former workers in retirement and health benefits. The plan approved yesterday calls for more oversight from outside the city including the state government.

City Council President Charles Pugh says this plan is an important first step.

Charles Pugh: We are at a critical point where our revenues are so low, and some of our costs are fixed or growing, so that's a problem.  And we've got to make adjustments, still.

At a special session last night, council members got an earful from city residents, including Malik Shabazz.

Malik Shabazz: Any mayor and any council person who would willingly sign away our hard-fought powers, rights and gains, is either too stupid, too ignorant, too retarded, or too traitorous for the people to allow.

The plan's backers said they didn't have much of a choice. The State threatened to appoint an emergency manager if the council couldn't agree to a plan by today.

I'm David Gura, for Marketplace.

About the author

David Gura is a reporter for Marketplace, based in the Washington, D.C. bureau.

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