Well, here’s more bad news for the city of Detroit: Standard & Poor’s Ratings Services downgraded the city’s bond ratings to junk status. The ratings on approximately $2.4 billion of unlimited and limited tax debt were cut to BB. They had formerly been BBB and BBB-, respectively. S&P analyst Jane Hudson Ridley told reporters that the new rating “reflects a downward trend in some revenue sources that has made balancing operations difficult and the continued difficulty in assessing the city’s financial position, given its chronically late audits and its historical tendency to end the fiscal year with results that compare unfavorably with initial projections.”
The downgrade could mean higher interest rates for the city, but it also allows investors with which the city engaged in credit swap agreements to request a payout from the city. That payout could total up to $400 million.
Meanwhile, Mayor Ken Cockrel Jr. told reporters, “We are resolved to ensure that Detroit is financially stable.” Right. I’m sure that means a lot to the citizens of the city who’s bond rating was just downgraded. He later continued, saying, “Ultimately the only way to deal with the problem is to fix it.” Yes, Mr. Mayor – the only way to fix a problem is to fix it. Who elects these people?
Joseph Harris, the city’s chief financial officer told reporters that city officials are putting together a plan so that creditors won’t demand their money. He said, “We won’t be able to come up with $400 million. We don’t expect anyone to ask us for $400 million. What we expect them to ask us for is some guarantees or some assurances.”
You mean guarantees like, “I didn’t cheat on my wife and cost the city millions of dollars in a whistle-blower lawsuit”? Oh wait, those guarantees were false.
Irvin Corley Jr., the City Council’s fiscal analyst, told reporters, “I would think they would understand that the city is not in a position to come up with $400 million.” So, wouldn’t that make them want their money ASAP even more?
The reason S&P downgraded the status, was that the city was turning in yearly audits late. This comes after former Mayor Kwame Kilpatrick had about S&P raising the city’s rating from negative to stable. Cockrel shares a different sentiment, saying that S&P officials feel that they were deceived by the city.
Harris continued his chat with reporters, saying, “We’ve got to put together a budget whereby our revenues either equal or exceed our expenditures.” HOLY CRAP! A budget where you bring in more money than you spend? IS THIS LEGAL??? The fact that the city’s CFO has to actually say that statement troubles me. Isn’t it common knowledge that you’re expenditures should be lower than your revenues, otherwise you LOSE MONEY? Seriously, where do these people come from?
Perhaps Councilwoman Sheila Cockrel will be able to enlighten us. After telling reporters that this is “as serious as you can get,” she said that “We as a City Council, as a community and as a group of city leaders are going to have to address the fundamental restructuring of city government.” That might have been the smartest thing any city official said on the issue.
But in all seriousness, this is just sad. Sure, other cities (New Orleans, for example) are in the same situation, but that doesn’t excuse it. The city of Detroit needs COMPLETE overhaul. I still say Oakland County Executive L. Brooks Patterson the Great should just annex Detroit and become Supreme Ruler of it so that he can clean it up a bit. I don’t know, maybe I’m asking for too much. Maybe a balanced budget just isn’t in the cards for Detroit. Maybe Detroit’s fate dooms it to utter disaster. But maybe, just maybe, this isn’t a problem of fate or stars or cards, but a problem with GOVERNMENT, a corrupt government to be exact. If Detroit cleaned up it’s act, I guarantee that it could get a better bond rating.
But Detroit can’t do this when it’s citizens continue to vote scum like Kilpatrick into office. Detroit, the blame, for now, rests on your own shoulders – it’s your dumb mistakes at the ballot box that cost you this time, and now, it’s up to you to fix it.