The New York Times reported on the Detroit bankruptcy along with a graph showing the scale of that bankruptcy compared to other municipalities that have gone through bankruptcy:
In terms of raw dollar value, nothing even comes close to what Detroit is going through. I wanted more context on the scope of the challenge.
First thing I went looking for was the total city revenue. The 2011 – 2012 Budget Summary shows total revenue of $3.1 billion. The 2010 – 2011 Budget on page B10 has a history of city revenue going back to 2004-05. It ranges from a high of $3.7 billion in 2004-05 to a low of $2.8 billion in 2005-06, making the $3.1 billion for 2011-12 within a normal range for the last decade.
Even if all of the $3.1 billion in city revenue went to paying off the $18 billion in debt it would take 5.8 years. On the other end, using 10 percent of the city revenue to pay off the debt would take 58 years. From what I’ve been able to find so far in the budget reports the amount set aside to service debt was more like 2.6 percent, which would take 225 years to pay off the total debt. All of this assumes no new additional debt and ignores interest.
In October 2012 the site 247wallst.com listed Detroit as having $2.5 billion in 2011 general fund debt. It sounds like they didn’t have the full picture of how bad things really were as recently as 2011.