The city's budget problems have deepened to such an extent that it could run out of cash in a matter of weeks or months and ultimately be forced into what would be the largest-ever Chapter 9 municipal bankruptcy filing in the United States.
Frustrated by the lack of concrete progress, Michigan Governor Rick Snyder, a Republican, last month appointed a team to scour the city's books.
The audit could result in a state takeover of Detroit's finances through the appointment of an emergency financial manager. Such a manager, who would seize control of the city's checkbook, could then propose federal bankruptcy court as the best option.
Snyder said the team would deliver its Detroit's population is now just over 700,000 - down 30 percent since 1990.
In the booming post-Second World War era, Detroit was America's fifth-largest city. Today, it ranks 18th. In addition to a sharp population decline, it suffers from high unemployment related to a loss of businesses, a flood of home foreclosures and a cut in state funding.
That has led to shriveling revenue, leaving the city unable to afford a workforce of more than 10,000 and the surging health and pension costs that go with them and with its retirees.
As a result, credit ratings on Detroit's approximately $8.2 billion of outstanding debt have sunk deeper into junk territory.
The city's labor costs, including health care and pensions, are shrinking in absolute terms but rising as a share of the budget.
They are slated to drop to $968 million, or nearly 49.5 percent of the operating budget, in the fiscal year ending June 30 versus $1.14 billion, or 45.5 percent, a year earlier.
Signs of decline are everywhere - in a rising crime rate, streets without lights and block after block of abandoned buildings.
The murder rate of one per 1,719 people last year was more than 11 times the rate in New York City. The jobless rate is above 18 percent, more than twice rate for the country as a whole.
A bankruptcy would be messy.
"I think...off and on, that it wouldn't be a bad idea," said former Ford chief financial officer Allan Gilmour, now the president of Detroit's Wayne State University. "Let's clean this out once and for all."