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Detroit’s Challenges Far From Over as City Exits Bankruptcy

detroitAs it exits the largest municipal bankruptcy in American history, the city of Detroit still has a long way to go — and its road to full recovery is expected to be filled with plenty of challenges.

According to the Detroit Free Press, the city is planning to generate the $1.7 billion of its post-bankruptcy restructuring plan through a combination of debt restructuring (which will generate about $900 million), new revenues ($483 million) and cutting costs ($358 million).

The plan sounds simple enough on paper, but past efforts to raise revenue and cut costs have proven problematic in Detroit. The city will have to face outdated, inefficient technologies, labor unions, the lack of resources and other issues while trying to raise the money needed for its bankruptcy exit to be a success.

One way Detroit will begin to be more accountable for its finances is its timely reporting strategy, which will require budget-to-actual cost reports and analyses to take place each quarter. Before the bankruptcy, these analyses would sometimes be released years after the fiscal year for which they accounted, the Detroit Free Press reports. By taking the relationship between revenue and cost into account more frequently, shortcomings and problems with the city’s spending can be addressed faster.

And while signs of hope are manifesting themselves throughout the city in the form of new developments and a more bustling downtown, Detroit still faces problems like de-population and falling housing stock — about 1.6 million people lived in Detroit in 1960, and only 800,000 people live there today, according to Metro. With fewer residents, it will be harder for the city to generate the revenue it needs to recover.

“The revenue outlook is still pretty bleak,” Dan Gilmartin, the executive director and CEO of the Michigan Municipal League, told the Detroit Free Press.

Other concerns facing the city include its notorious violent crime rate and a public transportation system that is considered by many to be among the worst in the country — both of which will require the city’s investment to help improve.

While many Detroit residents are hopeful for the opportunities a post-bankruptcy future may hold, the city’s numerous problems are far from resolved — and there’s plenty of work to do to help steer it toward recovery.



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