Detroit Files For Bankruptcy, Once Proud Motor City Owes $19 Billion
After years of decline the once proud city of Detroit has finally hit bottom as the city filed the largest municipal bankruptcy in the nation's history on Thursday, according to the Washington Post.
When Detroit was the hub of the country's auto industry it was booming with a population close to 1.8 million people, after years of people moving to the suburbs combined with jobs leaving town Detroit has been struggling to maintain a population of 700,000. As the people and the businesses left the motor city so did their tax dollars leaving the city with an astounding $19 billion worth of debt, the Washington Post reports.
Kevyn Orr, Detroit's emergency manner, had been attempting to make a deal with creditors that would allow the city to pay back at least some of its massive debt without filing for bankruptcy. Unable to strike a deal the city was left with no other choice.
"The fiscal realities confronting Detroit have been ignored for too long," Gov. Rick Snyder said. "I'm making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future. This is a difficult step, but the only viable option to address a problem that has been six decades in the making."
Earlier in the week Detroit's two pension funds sued in an effort to have the bankruptcy claim blocked as they fear that Orr will almost completely eliminate retiree benefits in the restructuring. The two funds are owed $9.2 billion, according to the Detroit Free Press.
"Pension boards, insurers, it's clear that if you're suing us, your response is 'no,'" Bill Nowling, a spokesman for Orr's office, said. "We still have other creditors we continue to have meetings with, other stakeholders who are trying to find a solution here, because they recognize that, at the end of the day, we have to have a city that can provide basic services to its 700,000 residents."
City Council President Pro Tem Andre Spivey reassured citizens that, for now, the services they count on from the city will continue to exist.
"City services we provide will not be shut down," Spivey told the Detroit Free Press. "We'll still be providing services, but the challenge is where we're going to get to as we go through the bankruptcy process."