It wasn’t that long ago that the city of Detroit went through a historic bankruptcy. Now, for a second year in a row, Mayor Mike Duggan’s administration is reporting a deficit-free budget.
This is important for two reasons. It means there are dollars to make improvements (we’ll get into what the Mayor has in mind in a moment), and it’s one more step toward exiting active oversight by the Detroit Financial Review Commission a restriction imposed under terms of the 2014 bankruptcy.
One of a number of requirements to exit oversight is three consecutive years of deficit-free budgets.
The city of Detroit, according to their 2016 report, took in approximately $2.1 billion in revenues, and had a $62.9 million surplus. Their budget year ends June 30.
“This audit confirms that the administration is making good on its promise to manage Detroit’s finances responsibly,” said Mayor Mike Duggan. “With deficit-free budgets two years in a row, we have put the City on the path to exit Financial Review Commission oversight.”
More than 20 percent of Detroit’s budget is sourced from a municipal income tax, and just 17 percent is from property taxes. Here’s a chart of the sources of revenue for the city of Detroit.
When it comes to 2017, the administration is projecting a $51 million surplus in FY 2017 with about a month remaining in the year.
The 2016 Comprehensive Annual Financial Report says there are $143 million in accumulated unassigned fund balances that include this year’s surplus.
Of that fund balance, Detroit has used:
- $50 million in FY 2017 to help set up the Retiree Protection Fund
- Set aside $50 million in the FY 2018 budget for blight remediation and capital improvements
A $43 million unassigned fund balance that would carry over to the next fiscal year the city plans to use as a cushion to manage the risks that come with potential changes in the economy or federal funding.