Detroit's own report admits its financial emergency

AP Photo

Members of Detroit’s legislative delegation and some City Council members are still saying that they will oppose the emergency manager due to be appointed by Gov. Snyder.

Councilwoman JoAnn Watson persists in her call for a legal challenge to the manager and Councilman Kwame Kenyatta says he wasn’t “elected to cooperate with an emergency manager.”

Here’s the thing: Detroit financial condition isn’t a figment of the governor’s imagination. Snyder’s review team has found Detroit to be in dire financial straits, but the council members and lawmakers don’t have to take the review team’s word for it.

All they have to do is read Detroit’s 2012 Comprehensive Annual Financial Report (CAFR). A few facts from the report, which was filed a few months ago and reflects the city’s financial position at the end of June. The CAFR notes that the city’s General Fund had a deficit of more than $250 million.

The CAFR also observes that the city has $644 million in unfunded pension obligations. Far worse, it also has $5.7 billion in unfunded liabilities in non-pension costs for retirees — primarily health coverage.

The CAFR also notes that retirees outnumber active workers on Detroit’s payroll by two to one.

The CAFR also observes that the city floated long-term bonds in August, 2012 and used part of the proceeds to pay down short-term notes floated in March, 2012. In other words, the city was borrowing to pay down prior borrowing.

In other words, the city is financially circling the drain. The CAFR is provided to the state — a requirement of all municipalities — by Detroit’s Finance Department and vetted by the city’s outside auditors, KPMG.

Detroit doesn’t need the governor’s office, state Treasurer Andy Dillon, or the governor’s review team to say the city is in dire financial straits. It has admitted it itself. All the dissenting members of Detroit legislative delegation and certain council members need to do is listen to their own Finance Department and auditors.

Unless they have some other agenda than the financial health of the city, which is the only way Detroit residents are going to get the essential police, fire, lighting and other services they desperately need.