Motor City Set to Stall: Detroit Going Broke

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The motor city is set to stall in less than a week, if the state of Michigan refuses to withdraw its lawsuit challenging a consent agreement signed between the city and state. For the city, the suit would mean immediate crisis if continued, and without revenue sharing support from the state, Detroit officials claim that the city will run out of money by June 15.

“If our city runs out of money there is no bigger crisis facing our city,” Detroit mayor Dave Bing told the Detroit News this morning. “It is an emergency. It is a crisis and we’ve been in a crisis for a long time. This just ups the ante more than anything else.

Whether or not the lawsuit is withdrawn in time to avert bankruptcy is actually the decision of City Attorney Krystal Crittendon, who filed the lawsuit saying that the consent agreement signed in April was “void and unenforceable.” Crittendon claims that the state of Michigan owes Detroit $224 million in revenue sharing, along with over a million dollars in other debts. A newly revised city charter prevents the city from entering into contracts or agreements with parties that are in default to the city, which in this case would include the state.

Unfortunately, if Crittendon follows through with the lawsuit, it would likely lead to Michigan withholding $80 million in revenue sharing that was agreed upon during the city’s last major financial scare in March. Though Bing has requested that Crittendon drop the lawsuit, the city charter prevents him from forcing her to do so. Essentially the situation is a case of biting the hand that feeds. Still, the mayor is devoted to salvaging the agreement.

“Over the past three weeks, I’ve had several discussions with (Crittendon) and the Detroit City Council, voicing my concerns about the ramifications of any legal challenge to the Financial Stability Agreement,” Bing said in a statement. “I have, in fact, urged (Crittendon) to withdraw the lawsuit and her prior opinion about the Financial Stability Agreement.”

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