CHICAGO (Reuters) - Detroit’s post-bankruptcy finances have improved to the point where the city should be able to exit state oversight in early 2018, a Michigan official said on Wednesday.
Eric Scorsone, who oversees local Michigan governments as a senior deputy state treasurer, said Detroit was on track to end its third-straight fiscal year without a budget deficit. That is a main requirement for the Detroit Financial Review Commission, created as part of the city’s bankruptcy exit plan, to go dormant.
“I never thought Detroit’s recovery could happen so quickly,” Scorsone told a Chicago conference sponsored by the Civic Federation and the Federal Reserve Bank of Chicago.
Michigan’s largest city ended the biggest-ever U.S. municipal bankruptcy in December 2014 after shedding about $7 billion of its $18 billion of debt and obligations.
If Detroit exits state oversight, the commission, which currently meets monthly, could come back to life if the city had a deficit or debt problem, Scorsone said.
Detroit must still deal with an unfunded pension liability of at least $2 billion and pension payments set to resume in 2024, according to Scorsone.
A court-approved bankruptcy exit plan had projected city pension payments would total $111 million beginning in fiscal 2024. But a subsequent actuarial analysis pegged the payment spike at $200 million or more.
The Detroit City Council in March approved Mayor Mike Duggan’s proposal to deposit $377 million into a trust fund by the end of fiscal 2023 to help Detroit cover the higher-than-expected pension payments.
“That’s great because the city really moved proactively,” Scorsone said.
Reporting By Karen Pierog; Editing by Andrew Hay