Originally published on Tue December 11, 2012 8:55 am
Detroit Mayor Dave Bing delivers his State of the City address on March 7. If Bing and the City Council can't agree on a plan to reduce the city's budget deficit, state officials are poised to take away their power over Detroit's finances.
Detroit officials face a tough vote Tuesday as they try to keep their city from going over its own "fiscal cliff." If the mayor and City Council cannot agree on a plan to reduce the city's budget deficit, state officials are poised to take away their power and assume total control over Detroit's finances.
It's been a continuing vicious cycle: Detroit's population exodus, lost tax revenue and chronic mismanagement have left the city burning through cash to the point where the state of Michigan has to provide funding to help the city meet payroll for the next few months.
SCOTT SIMON, BYLINE: The city of Detroit is approaching its own fiscal precipice. The city is deeply in debt and could run out of cash by the end of this month. That would mean more layoffs from a city workforce that's already been cut so much that a reported two-thirds of the city's streetlights do not work. The amount of empty, abandoned land in the city, which produces no tax revenue, is estimated to be as large as the entire city of Paris.
U.S. households owe a bit less than they did at the peak of the bubble. But they still owe a lot: $11.4 trillion, give or take a few billion. Mortgage and home-equity debt is still by far the biggest chunk of that debt.