Detroit exits active state financial oversight after largest municipal bankruptcy in U.S. history

by

comment
COURTESY PHOTO
  • Courtesy photo

Detroit has exited active state financial oversight after balancing its budget in each of the three years since the city emerged from bankruptcy.

The State Financial Review Commission that sprouted from the city's bankruptcy restructuring plan voted unanimously to "go dormant" today, in a move that returns financial control to the mayor and city council. The nine-member FRC says it will remain inactive for its decade-long term, so long as the city continues to post balanced budgets each year.



Until now, the FRC had final decision-making power on budgets, collective bargaining agreements, and contracts larger than $750,000.

In a news release, Mayor Mike Duggan called the end of oversight a milestone in the city’s continued progress and a testament to the his administration's commitment to strong fiscal management.



“For the first time in four decades, Detroit’s elected leadership will be in complete control of government functions,” Duggan said in the release.

The end of active state oversight closes the curtain on a 40-year stretch in which some aspect of Detroit city government was under the oversight of a state or federal entity. That includes 36 years of federal court oversight of the Water & Sewerage Department for environmental issues, a decade of U.S. Justice Department oversight of the police department over use-of-force and lockup conditions, and a decade of U.S. Housing and Urban Development control of the Detroit Housing Commission due to poor performance.

Detroit shed about $7 billion of $18 billion in debt and obligations when it went through bankruptcy in 2014. The city now boasts a $36 million projected operating surplus for this fiscal year and says it has created a 10-year budget forecast to "ensure continued stability."

But Detroit could owe billions in pension obligations that it will need to start paying off in 2024. Those payments will cost the city $143 million a year. The Duggan administration and city council have said they plan to stock away $335 million in surpluses over the next eight years in order to help ease that burden.

Stay on top of Detroit news and views. Sign up for our weekly issue newsletter delivered each Wednesday.

We welcome readers to submit letters regarding articles and content in Detroit Metro Times. Letters should be a minimum of 150 words, refer to content that has appeared on Detroit Metro Times, and must include the writer's full name, address, and phone number for verification purposes. No attachments will be considered. Writers of letters selected for publication will be notified via email. Letters may be edited and shortened for space.

Email us at letters@metrotimes.com.

Detroit Metro Times works for you, and your support is essential.

Our small but mighty local team works tirelessly to bring you high-quality, uncensored news and cultural coverage of Detroit and beyond.

Unlike many newspapers, ours is free – and we'd like to keep it that way, because we believe, now more than ever, everyone deserves access to accurate, independent coverage of their community.

Whether it's a one-time acknowledgement of this article or an ongoing pledge, your support helps keep Detroit's true free press free.