"You can't borrow your way out of debt," argued Flint Councilman Josh Freeman, chair of the Finance Subcommittee and expert of Flint's budget situation.
For people interested in a functioning city, it is fortunate that six other Councilmembers disagreed and voted to borrow $20m during Monday’s Council meeting. Without this money, the city will run out of cash in two months.
No money = no paychecks = no services = no city.
What does this mean?
Imagine GM moved your job overseas, and you’ve sunk to working bad jobs for a couple of years. Your wife’s savings and steady salary kept the lights on and the family together. Now, her savings is almost gone. Worse yet, her pay was recently cut. You still have to feed the kids, pay the babysitter, take care
of sick grandma, and pay for college. In two months, however, you won’t have any cash; you’ll be officially broke. Cashed out, Lights out, Get out.
What do you do?
Find another job:
- Jobs are scarce and competition is fierce.
- It’s too late for that, and Grandma’s not going anywhere
- You don’t have money for lawyers and it might not work as expected
Borrow on the credit card:
- The only solution.
What does the $20m do?
|Flint Water Plant|
Now what do you do?
You (and Flint) have enough cash for one year, given your lifestyle. How can you (and Flint) receive more income and cut expenses to keep you from relying on your savings? Councilman Freeman, with his comment mentioned at the beginning, wanted that plan. This is the reason you can’t borrow your way out of debt. It might keep you from catastrophe, but without a plan, it’s not sustainable.