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Detroit’s mayor sees other cities facing bankruptcy

No calls for federal bailout as city grapples with $19B debt

- The Washington Times - Sunday, July 21, 2013

Detroit Mayor Dave Bing warned Sunday that his may be the first major city to declare bankruptcy, but that it won't be the last.

"We're not the only city that's going to struggle through what we're going through," said Mr. Bing on ABC's "This Week." "There are over 100 major urban cities that are having the same problems we're having. We may be one of the first. We are the largest, but we absolutely will not be the last."

Mr. Bing, along with Michigan Gov. Rick Snyder and Detroit emergency manager Kevyn Orr, made the rounds of the Sunday talk shows to discuss Thursday's bankruptcy filing, which came with the city confronting an estimated $19 billion long-term debt burden.

Nobody called for a federal bailout, although they did leave the door open to the possibility. Asked about the possibility of a bailout, Mr. Bing said, "Not yet. You know, I know the president has a lot on his plate."

Mr. Snyder, appearing on CBS' "Face the Nation," said he approved the decision by Mr. Orr to file for bankruptcy protection, adding "this was a very difficult decision, but it's the right one."

Would he ask for a federal bailout? "No, and I don't expect one," said Mr. Snyder, a Republican.

"If the federal government wants to do that, that's their option," he said. "Again, I don't view that as the right answer. The right answer is bankruptcy is there to help deal with the debt question."

Vice President Joseph R. Biden said earlier that the administration is studying whether the federal government can help Detroit, but that "we don't know yet."

Mr. Orr, who was appointed by the governor in March to fix Detroit's financial woes, said, "If that comes and there is help, great. But if it doesn't, I can't stand around waiting for it to happen. So, I'm dealing with reality."

"[O]ne thing I would say is we operate on the assumption that we have to clear this process, this problem, on our own. We are not expecting the cavalry to come charging in," said Mr. Orr on "Fox News Sunday." "We are out here on outpost and we have to fix it because we dug the hole."

About $10 billion of the city's long-term debt comes from unfunded pension and health care coverage for its 18,000 retired city employees. Detroit still has about 10,000 active public workers in a city that has seen its population plummet from 1.8 million to about 700,000.

Mr. Orr said he planned to have a "dialogue" with the pension funds about benefits, adding that he's "highly sensitive" about the issue because his mother is a pensioner. So far he has guaranteed pension recipients another six months of full payments.

"First of all, I'm empathetic about the problem," said Mr. Orr, a turnaround specialist who helped Chrysler with its successful restructuring. "What I also say is, we don't have a choice. We've crossed the Rubicon on the level — we have $18 to $19 billion dollars in debt and no funding mechanism for it. So, this is a question of necessity."

Ingham County Circuit Judge Rosemarie Aquilina ruled Friday that the bankruptcy filing violated the state constitution, but Mr. Bing predicted the bankruptcy would eventually be upheld.

"Well, I'm not a lawyer. And I'm glad I'm not at this point in time, but I'm hearing ... that the federal Constitution will trump the state constitution," said Mr. Bing, an NBA Hall of Fame basketball player who spent most of his career with the Detroit Pistons.

A first-term mayor who has said he will not seek re-election, Mr. Bing cut the size of city government by about 20 percent in an effort to balance the books. It wasn't enough in a city with a history of overspending and underfunding, combined with blips of corruption, that dates back 60 years.

"Whatever happens, we can't allow lawyers to dictate what's going to happen in our city and its comeback," Mr. Bing said. "We've got to throw away a lot of the bickering and fighting amongst us and do what's best to bring cities like Detroit back."

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