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Bing: Employee furloughs could get Detroit through cash crisis

Detroit mayor Dave Bing says he’ll resort to mandated employee furlough days before letting the city go broke.

The city is facing a likely $18 million cash shortfall next month. That’s despite having a consent agreement with the state that’s intended to avoid just such a crisis.

This week, the Detroit City Council voted down a contract with a law firm. That relatively small item was crucial to the city’s cash situation because it was part of a “milestone agreement” laying out conditions for releasing Detroit bond money the state is holding in escrow.

Now, the state is withholding $30 million of that. And Bing says that means the city will likely run out of cash before the end of the year.

Chief Financial Officer Jack Martin says that won’t happen.

“We’re planning at this point to implement additional cuts, to ensure that the city doesn’t run out of money,” Martin said, adding, “There will be no payless paydays, and no missed debt payments.”

What there will be is unpaid furlough days for city employees starting January first. Martin said he believes that can cover the cash shortfall, and Bing said it won’t affect public safety.

Bing says he’s frustrated that the city’s fiscal future has come down to politics. “I’m interested in one thing, and that is to make sure that our city is fiscally stable,” he said.

It’s not yet clear how the January furloughs would alleviate the December cash crisis.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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