Detroit Mayor Mike Duggan recently made some significant claims against the city's former Emergency Manager Kevyn Orr. Duggan accused Orr and his team of misleading the city of Detroit on the future cost of pensions.
Under the current financial arrangement, the city does not have to foot the bill for pensions until 2024.
According to Duggan, Orr and his team lowballed the amount significantly when they told the city they would likely have to pay roughly $114 million per year.
However, the Duggan administration crunched the numbers and according to their math, if the stock market returns are positive, that number would be closer to $167 million. If the stock market doesn't produce positive returns, that number could balloon up to $344 million.
Detroit News business columnist Daniel Howes recently wrote about the controversy. He joined Stateside to talk about how this accusation could impact Duggan's re-election campaign.
Duggan has a difficult primary election coming up as he faces off with Coleman Young II. Howes said the Mayor could be using this situation to score political points ahead of the Democratic primary. The irony, he said, is that Duggan owes a lot to emergency management.
"The reality is, a lot of the change and the financial restructuring and the operational restructuring that [had] begun under Kevyn Orr and continued under the Mayor... [Duggan] never would have been able to get that going under normal course of business," Howes said. "Emergency management and bankruptcy was a big friend to Mayor Duggan and, frankly, to the City Council. A lot of difficult things were done, and people could say 'Hey, we didn't do that, that was the bankruptcy process, that was the emergency manager.'"
Listen to the full interview above to learn why there is value in the accusations even if it doesn't lead to a lawsuit.
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