Quantcast

Detroit official: Debt plan 'adjustments' possible - WCAX.COM Local Vermont News, Weather and Sports-

Detroit official: Debt plan 'adjustments' possible

Posted: Updated:
(AP Photo/Carlos Osorio, file). FILE- This April 9, 2008 file photo shows the city of Detroit. (AP Photo/Carlos Osorio, file). FILE- This April 9, 2008 file photo shows the city of Detroit.
Graphic illustrates Detroit's slow decline into bankruptcy, featuring charts showing the city's population, unemployment rates and revenue decline.; 2c x 6 inches; 96.3 mm x 152 mm; Graphic illustrates Detroit's slow decline into bankruptcy, featuring charts showing the city's population, unemployment rates and revenue decline.; 2c x 6 inches; 96.3 mm x 152 mm;
  • NationalMore>>

  • APNewsBreak: 'Easy Rider' bike going to auction

    APNewsBreak: 'Easy Rider' bike going to auction

    Wednesday, September 17 2014 7:32 AM EDT2014-09-17 11:32:29 GMT
    The Captain America chopper Peter Fonda rode in "Easy Rider" is coming to auction.
    The customized Captain America chopper Peter Fonda rode in "Easy Rider" has come to symbolize the counterculture of the 1960s. Now it's for sale.
  • Big break in ambush probe: suspect's abandoned SUV

    Big break in ambush probe: suspect's abandoned SUV

    Wednesday, September 17 2014 6:22 AM EDT2014-09-17 10:22:45 GMT
    Authorities are searching for a heavily armed survivalist suspected in an ambush that killed one Pennsylvania State Police trooper and wounded another in a heavily forested region of northeastern Pennsylvania.
    Authorities say a heavily armed survivalist with a vendetta against law enforcement is the suspect in an ambush that killed one Pennsylvania State Police trooper and wounded another in a heavily forested region of...
  • Red tide off northwest Florida could hit economy

    Red tide off northwest Florida could hit economy

    Wednesday, September 17 2014 4:32 AM EDT2014-09-17 08:32:21 GMT
    It's like Florida's version of The Blob. Slow moving glops of toxic algae in the northeast Gulf of Mexico are killing sea turtles, sharks and fish, and threatening the waters and beaches that fuel the...
    It's like Florida's version of The Blob. Slow moving glops of toxic algae in the northeast Gulf of Mexico are killing sea turtles, sharks and fish, and threatening the waters and beaches that fuel the region's...
By COREY WILLIAMS
Associated Press

DETROIT (AP) - Detroit's chief financial officer acknowledged Thursday that officials may have to make "adjustments" to a plan aimed at reducing the bankrupt city's debt if future revenues come in lower than projected.

John Hill Jr. was the first witness called during a trial that began this week, where a federal judge is weighing whether to approve the city's long-term plan to get out of bankruptcy.

Detroit is trying to cut its unsecured debt from $12 billion to $5 billion in a plan that most creditors, including more than 30,000 retirees and city employees, have endorsed.

As part of that effort, officials say the city needs $1.7 billion over the next decade for reinvestment, to tear down vacant houses and improve police, fire and other services. The city plans to borrow $200 million and is proposing $1.5 billion in spending cuts or revenue increases, such as selling off city assets, outsourcing some services and collecting unpaid property taxes.

Under questioning from a lawyer representing the city, Hill acknowledged there may have to be some changes in the plan if revenues fall short, but didn't go into specifics.

"If the revenues don't come in as intended in the plan, we'll have to make adjustments," Hill said. "Those adjustments would be changes in the plan. We definitely believe the plan gives us a roadmap on how we should be operating."

An attorney representing one of the city's creditors cited a report that an estimated $130 million in property taxes go uncollected in Detroit. Hill responded under cross-examination that collection rates are "starting to creep up." He also said the city's property tax rate is at its maximum and only can be raised by an act of the Legislature.

The bankruptcy trial started Tuesday with opening statements. Hill was expected to return to the stand Friday.

Bond insurers Syncora Guarantee and Financial Guaranty Insurance Co. are leading a small group of creditors fighting the approval of the plan crafted by state-appointed emergency manager Kevyn Orr and his restructuring team.

They say Orr is treating pensioners better than financial creditors. Syncora has said Detroit wants to pay pennies on the dollar for its claim of about $400 million. An attorney for Financial Guaranty Insurance said Wednesday that its claim is about $1 billion.

Orr's plan calls for the city's general retirees to take a 4.5 percent pension cut and lose annual inflation adjustments. Retired police officers and firefighters would lose a portion of their annual cost-of-living raise.

Cuts to retirees would be steeper if not for a commitment of more than $800 million over 20 years from the state, major corporations, foundations and others. The so-called Grand Bargain also would place city-owned pieces in the Detroit Institute of Arts into a trust and out of the reach of debtor demands.

Syncora has said the artwork to be considered assets of the city that should be used to help settle Detroit's debt.

In July 2013, Orr made Detroit the largest U.S. city to file for bankruptcy. Federal Judge Steven Rhodes approved the bankruptcy petition in December.

Hill was hired in November 2013. He testified Thursday that the office had trouble keeping track of how much money was coming in and going out before he took the job. A computer system designed to track the city's finances had not been fully implemented, Hill said.

Detroit's internal controls over financial reporting were "very, very poor," Hill said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WCAX. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.