Detroit’s leading tax estimator, appearing as part of the city’s historic bankruptcy trial, defended the 10-year revenue model used to help justify imposing $7.4 billion in cuts on creditors including bondholders and pensioners, Bloomberg News reported yesterday. Robert Cline, an economist hired to create 10-year and 40-year revenue forecasts for the city’s bankruptcy-exit plan, testified in federal court in Detroit today that he factored in long-term population declines and weak job growth in estimating future tax collections. Bond insurer Syncora Guarantee Inc. questioned Cline’s work, saying that it assumed the city couldn’t raise tax rates or find new ways to increase revenue that could be used to pay creditors. Syncora, which may be forced to make up losses by city bondholders it insured, opposes the debt-cutting plan. Detroit, which filed a record $18 billion municipal bankruptcy last year, must convince U.S. Bankruptcy Judge Steven Rhodes at a trial that its debt-cutting plan is feasible and fair. While the trial is set to start Aug. 29, Cline was in court yesterday because he will be unavailable to appear after tomorrow.
