Detroit released from state financial oversight 3 years after exiting bankruptcy
DETROIT (WJBK) - The City of Detroit has been released from state financial oversight three years after exiting the largest ever U.S. municipal bankruptcy.
The Detroit Financial Review Commission voted early Monday afternoon to release the city from active state financial oversight. A city official tells FOX 2 the board voted unanimously.
The State Financial Review Commission, which was created in late 2014 to oversee Detroit's finances as it emerged from bankruptcy, voted after the city delivered three consecutive audited balanced budgets.
A $36 million operating surplus also is expected for fiscal year 2018.
Detroit was about $12 billion in debt and unable to deliver adequate city services when Republican Gov. Rick Snyder placed the city under state receivership in early 2013. A state-appointed emergency manager overseeing Detroit's finances filed for bankruptcy the same year. Detroit exited bankruptcy in December 2014, restructuring about $7 billion in debt and setting aside $1.7 billion in savings and revenue over a decade to improve city services.
"For the first time in four years , Detroit's elected leadership will be in complete control of government functions," Mayor Mike Duggan said.
The financial review commission was created in 2014 and given oversight for borrowing and large city-issued contracts as part of the bankruptcy restructuring plan.
Most city operations were returned to Duggan's control in September 2014.
Under the terms of the bankruptcy, creditors received pennies on the dollar for what they were owed and thousands of retirees saw their pensions cut by 4.5 percent. Annual cost-of-living increases were eliminated.
The impact on retirees would have been more onerous if not for an $800 million promise from foundations, major corporations and the state to help soften cuts to their pensions while protecting city-owned pieces in the Detroit Institute of Arts from possible sale to satisfy creditors.