All Eyes Are On Detroit As Bankruptcy Decision Looms

DETROIT (WWJ) As speculation over Detroit's potential bankruptcy grows, one local union official said the city is spending too big on consultants to be able to cry poor.

Ed McNeill with AFSCME Council 25 said the city doesn't have a case for Chapter 9 bankruptcy.

"They have to be able to show there's some insolvency, that the city can't pay their bills, but yet if you look at the contracts, the contracts continue to go higher and higher as Mr. Orr amends the contracts for consultants that are working in the city of Detroit," McNeill said. "Vendor contracts have not stopped at this point."

As evidence, McNeill points out the $225,000 annual paychecks awarded by state-appointed emergency manager Kevyn Orr to new Police Chief James Craig and new compliance officer Gary Brown, a retired cop who resigned from council to join Orr's staff.

On the other side, Sandy Baruah, head of the Detroit Regional Chamber of Commerce, said it wouldn't be such a bad thing for Detroit to become the largest municipal bankruptcy case in history.

"Bankruptcy is a tool to solve problems, what this city needs is it needs financial stability, financial stability will allow outside money -- money from Chicago, Los Angeles, Shanghei, London -- to come in and invest," Baruah said. "Obviously we see the business opportunity that is in Detroit, you see companies and people who know Detroit investing in Detroit. But we can't carry it ourselves. We need outside investment."

Barula believes Orr will go for bankruptcy.

"The average resident at the end of this process should see improved services, which is something they certainly deserve," Baruah said. "When you listen to what Kevyn Off is talking about, he's talking about putting the needs of the residents first."

One consultant believes Detroit could still pull out a miracle and create a historic debt restructuring that keeps the city out of bankruptcy; another city official notably said the federal government should  bail out the city, though the president has made no indication that's a possibility. Meanwhile, the Detroit school district got a new emergency financial manager Monday after losing more than 100,000 students and millions of dollars in per-pupil funding since 2000.