Detroit may run out of cash next month and must cut long-term debt and retiree obligations, according to emergency financial manager Kevyn Orr’s preliminary plan to save Michigan’s largest city from bankruptcy, Bloomberg News reported yesterday. Orr’s report says the cost of $9.4 billion in bond, pension and other long-term liabilities is sapping the ability to provide public safety and transportation. He listed cutting debt principal, retiree benefits and jobs among his options. The report, required under a state law that gives Orr broad authority over city government, offers guidelines for cost cuts while giving few details. The document delineates Detroit’s financial situation, noting it is “insolvent on a cash basis.” Its accumulated deficit will top $380 million by June 30, and by then it will run out of cash unless it defers pension payments and other obligations, according to the plan.
