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Bouncing reality check



When Detroit Mayor Kwame Kilpatrick presented his budget for the 2005-2006 fiscal year last April, critics — with the cynics at this rag taking the lead — claimed his spending plan was a work of fiction. Instead of making tough choices, the mayor just made things up, producing a budget that had absolutely no chance of actually being balanced. The City Council revised the mayor's plan, supposedly adding a dose of reality, but that document was largely make-believe as well.

Nearly a year later, it's now safe to say: "We told you so." Our evidence? Last Thursday, the city's Finance Department asked the City Council to authorize the sale of more than $127 million in tax and revenue anticipation notes. In other words, the city is looking to do some big-time borrowing to keep paying its workers and creditors over the next several months.

Irvin Corley Jr., the council's fiscal analyst, is evaluating the proposal before that honorable body votes on it. The money will keep cash flowing for the remainder of this fiscal year, which ends June 30. The downside is that, by borrowing against next year's income, the 2006-2007 budget hole grows even deeper — with Corley predicting the deficit could reach a jaw-dropping $400 million or more if something drastic doesn't soon happen to address the problem.

Failure to achieve health benefit and pay concessions from the city's unionized workers has caused much of this year's shortfall. That's no surprise since the unions have said all along that there was "absolutely zero chance" they'd agree to taking pay cuts and picking up a big increase in insurance costs.

Will council members approve the loan? They're staying mum until Corley presents his analysis. But Joe Harris, the former Detroit auditor general who retired last December after a 10-year term, says they have no choice.

"They're going to approve it," he says. "They have to. The $127 million is going to be required to just get through the summer."

And then?

It won't be long until the city's "ship will hit the sand" financially, he predicts.

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