The city of Detroit will run out of cash a week from today if a lawsuit challenging the validity of a consent agreement is not withdrawn, city officials said this morning.
Jack Martin, the city’s new chief financial officer, said the city will be broke by June 15, but it should be able to make payroll for its employees. He said the city will be operating in a deficit situation if the state withholds payments on a portion of the $80 million in bond money needed to help keep the city afloat.
Deputy Treasurer Thomas Saxton told the city Thursday that the lawsuit against the consent agreement could force the state to hold back from the city $80 million in revenue sharing that was used, essentially, as collateral for interim refinancing of bonds issued in March so Detroit would not run out of cash.
Detroit has already used $35 million of the $80 million.
“If our city runs out of money, there is no bigger crisis facing our city,” Detroit Mayor Dave Bing said this morning.
Bing and the City Council tried to meet this morning to discuss the lawsuit filed last week by Corporation Counsel Krystal Crittendon – and Saxton’s letter – but were unable to do so because officials had not given enough warning about the meeting, which would have been in violation of the state’s Open Meetings Act. Bing and the council are scheduled to meet at 8 a.m. Monday.