Detroit finally emerges from post-bankruptcy as city gains control of finances
City was billions in debt back in 2013 — substantial surplus finally shown in 2017
Detroit emerged from post-bankruptcy oversight of its once-shaky finances on Monday after a state of Michigan board decided to end its active supervisory role.
The unanimous vote by the financial review commission, which was created as part of the city's federal court-approved bankruptcy exit plan, enables Detroit's elected officials to enact budgets and enter into contracts without first obtaining the board's approval.
Billions in debt leaves city in bankruptcy
The city ended what was then the biggest-ever U.S. municipal bankruptcy in December 2014 after shedding about $7 billion of its $18 billion of debt and obligations.
Last year, city and state officials started predicting the commission would transition in 2018 to a 10-year period of passive oversight as Detroit ended consecutive fiscal years with balanced budgets.
Back in the black
An audit released in February showed a $53.8 million operating surplus in the fiscal 2017 $1.3 billion general fund budget, bringing Detroit to the required three-straight balanced budgets for active oversight to end.
"This is the earliest we could have done it," Detroit Mayor Mike Duggan said in a news conference, referring to the commission's action.
James Spiotto, a municipal bankruptcy expert and managing director of Chapman Strategic Advisors, said while the city's finances have stabilized somewhat, more work needs to be done.
"It's like a diet. If you don't stay on it and if you don't do the right things to be financially sustainable, you can fall right back to where you were," he said.