Today, Governor Rick Snyder spoke with members of the media about Detroit's financial condition in response to a report issued this week by Michigan Treasurer Andy Dillon and the Detroit Financial Review Team. In the video above, Governor Snyder addresses the findings of that report.
"For many years, the city has been overestimating its revenues and overspending, [and] to resolve their deficit, they've been taking on massive borrowings," Snyder said. In addition, the city faces ballooning obligations for retirement obligations and, unfortunately, the city's recent actions have not been enough to solve the short-term and long-term needs of the city.
Snyder laid out goals for the city in order to help make sure that it is providing good services to its residents, including meeting the short-term cash crisis, dealing with long-term obligations and putting in place a system for balanced budgets. But, he said, it's not just about numbers and finances. "We need better services to the citizens of Detroit. The long term goal needs to be to grow the city. For all of Michigan to be successful, we need a thriving and successful Detroit."
Next week, Governor Snyder will announce the next steps following the review team's report.
In his presentation to the media, Governor Snyder underscored the fact that Detroit's financial woes didn't happen overnight -- rather, they're the product of decades of population decline.
One of the problems behind Detroit's financial problems is a failure of budgeting -- of overestimating revenue and overspending. The following chart illustrates that problem.
With its years of diminished revenue and overspending, Detroit has accumuluated a significant deficit, made worse by new borrowing used to pay its bills. The following chart shows the city's reported deficit, how much it has borrowed, and the total accumulated deficit it faces.
Lastly, Detroit has massive long-term employee-related liabilities totalling $1.57 billion, as you can see below.