Mayor says lawsuit could bankrupt Detroit

• Tweet

DETROIT, June 9 (UPI) -- A lawsuit over Detroit's financial agreement with the state could deplete the city's cash resources, Mayor Dave Bing said.

In opposition to the consent agreement with the state, city attorney Krystal Crittendon filed a lawsuit on the premise that a city law forbids Detroit from entering into a contract with an entity that is in default to the city.

Crittendon filed the suit because the state owes the city $224 million in revenue sharing, the Detroit Free Press reported Saturday.

Bing's response was to announce that the lawsuit could push the city into default. "I didn't want to get into a lawsuit -- it makes no sense to me, and nobody wins," Bing said, announcing, "If our city runs out of money, there is no bigger crisis that we would have."

If the city ran out of funds, the consent agreement with the state could be overturned, anyway, allowing the state to appoint an emergency fiscal manager to oversee the city's finances.

The current agreement with the state forestalls the appointment of an emergency manager.

Michigan Deputy state Treasurer Thomas Saxton, meanwhile, told city officials that the lawsuit could force the state to hold off on revenue-sharing agreements, given the lawsuit could have an effect on those agreements.

This would only hasten the city's fate.

But City Council President Charles Pugh said the claim the city would go broke due to the lawsuit "may be a bit of an exaggeration." The Detroit News reported that other political groups would file their own lawsuits, if Crittendon dropped hers.

That could be what happens, said former Detroit, Pontiac and Troy, Mich., city lawyer Peter Letzmann.

"I've never seen this kind of chutzpah by a city attorney acting without the authority of the mayor or City Council," Letzmann said, predicting a judge would dismiss the lawsuit because the city's own attorney had filed the case.