DETROIT (AP) — Detroit's chief financial officer acknowledged Thursday that officials may have to make "adjustments" to a plan aimed at reducing the bankrupt city's debt if future revenues come in lower than projected.
John Hill Jr. was the first witness called during a trial that began this week, where a federal judge is weighing whether to approve the city's long-term plan to get out of bankruptcy.
Detroit is trying to cut its unsecured debt from $12 billion to $5 billion in a plan that most creditors, including more than 30,000 retirees and city employees, have endorsed.
As part of that effort, officials say the city needs $1.7 billion over the next decade for reinvestment, to tear down vacant houses and improve police, fire and other services. The city plans to borrow $200 million and is proposing $1.5 billion in spending cuts or revenue increases, such as selling off city assets, outsourcing some services and collecting unpaid property taxes.
Under questioning from a lawyer representing the city, Hill acknowledged there may have to be some changes in the plan if revenues fall short, but didn't go into specifics.
"If the revenues don't come in as intended in the plan, we'll have to make adjustments," Hill said. "Those adjustments would be changes in the plan. We definitely believe the plan gives us a roadmap on how we should be operating."
An attorney representing one of the city's creditors cited a report that an estimated $130 million in property taxes go uncollected in Detroit. Hill responded under cross-examination that collection rates are "starting to creep up." He also said the city's property tax rate is at its maximum and only can be raised by an act of the Legislature.
The bankruptcy trial started Tuesday with opening statements. Hill was expected to return to the stand Friday.
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