Detroit - Vendors doing business with the city will be paid on a priority basis as Detroit deals with its cash flow crisis, officials said Friday.
The city has changed the way it pays vendors, seeking to prioritize who gets paid on a weekly basis. Department heads will determine what's essential and will refer their recommendations to Chief Operating Officer Chris Brown.
"This represents a shift of where we want to be to manage our cash flow," Brown said.
The vendor schedule is one of several new payment protocols to address the city's cash flow needs. Among the other initiatives is a 10 percent cut to contracts that is expected to save $13 million by June and $20 million by June 2013, officials said. About $2.3 million has already been generated by the move, officials said.
Detroit is facing a $45 million shortfall by June. Mayor Dave Bing is moving forward on his proposal that calls for givebacks from city workers and outsourcing some city services, including public lighting and management of city buses. The mayor has also called for 1,000 layoffs that will take effect in February. His plan aims for $102 million in savings in fiscal 2012 and $258 million in fiscal 2013.
Last month, Bing cited significant progress in fixing the short-term cash flow problem. About $10 million of some $15 million in past-due bills owed to the city by the Detroit Public Schools has been received, he said. A final payment is expected to be made this month.
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