Detroit rejects funds, will the city be out of cash by Christmas?
Detroit's city council rejected a condition that $10 million in much-needed aid was dependent upon. The city, which is struggling financially was expected to receive $30 million from the state of Michigan by mid-December.
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Detroit has struggled with its finances for many years as the city's population has dwindled and the automotive industry that once drove economic activity in the Motor City has diminished.Skip to next paragraph
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The city of 700,000 has been criticized by state officials for slow progress on financial reforms. It needs the money to avoid running out of cash by the end of the year. The Michigan Finance Authority raised $137 million for Detroit earlier this year through a debt sale. While Detroit received some of that money, Michigan Treasury officials tied another $30 million to Detroit's progress on reforms.
"The actions Detroit must take for the treasurer to release the funds from escrow were clearly established in the Memorandum of Understanding, sent to the mayor and city council last week," Buhs said.
City Council President Charles Pugh blamed Bing for the setback. "Why is Mayor Bing putting the city's finances at risk by marrying himself to one law firm?" he told reporters, adding he wants to meet with the mayor this week to choose a law firm that the council can accept.