Balancing Detroit budget on a wing and a prayer

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April 12, 2007

Detroit mayor seeks cap on city spending

David Josar and Amy Lee / The Detroit News

DETROIT — Mayor Kwame Kilpatrick began presenting his version of the city’s budget to council this morning, which keeps a cap on spending but adds about 100 police officers and money to fix up six neighborhoods.

“What we spend is what we bring in,” the mayor said.

The proposed 2007-2008 budget is slightly more than $3 billion and calls for adding 174 workers, including 103 cops.

Kilpatrick also pledged no layoffs and that he would roll out a plan where businesses could eliminate a garbage-hauling tax millage and replace it with a service fee, similar to what homeowners pay.

Last year, the mayor was successful in pushing through a $300 per household garbage collection fee in exchange for slashing 3 mills off the property tax bill that was targeted for solid waste disposal costs.

The next step for the mayor is to sell the plan to council, which has until June to approve it.

“We have managed our way through this very critical time period,” the mayor said.

He added that he needs council to approve $30 million in property sales by the end of June to realize his plan that by the end of June 2008, the city spends exactly as much as it takes in.”

In his last budget, Kilpatrick proposed raising about $40 million in selling off surplus property but that goal now seems unattainable with the fiscal year slated to end June 30 and a slump in the real estate market.

The mayor also said he has a better plan to lease off the city’s share in Detroit-Windsor Tunnel that will permanently eliminate the city deficit. He said he will reveal the details of the 75-year deal with Windsor as soon as it gets closer to completion.

As is customary, council was welcoming to Kilpatrick, who was flanked by deputy mayor Anthony Adams, chief of staff Christine Beatty and Police Chief Ella Bully-Cummings.

The mayor’s budget is unusually optimistic given the city’s declining population, loss of revenue and the fact Detroit leads the nation in mortgage foreclosures.

In addition the city relies heavily on funding from the state, a revenue stream that is expected to be slashed this year due to the Lansing budget crisis.

The mayor’s spokesman, Matt Allen, said Detroit is still waiting to hear from the state but will be prepared no matter what the news.

Kilpatrick has won kudos for slashing the city work forces and getting concession from labor unions on health care and retirement budgets, but fiscal experts and urban planners say the city’s reliance on borrowing money may soon haunt the city, much the way a family can be forced into bankruptcy by freely using its credit cards as its income remains stagnant.

One bright spot for the city is the Detroit casinos, which have pumped almost $1 billion into the city’s coffers since opening. The taxes they pay Detroit are expected to jump in the next year as they expand as they move into permanent buildings that in

The mayor’s budgets are often a work in progress. He has fought council over plans to lay off public safety workers, impose a tax on fast food and sell off the city’s ownership stake in the Detroit-Windsor Tunnel.

The fast food tax and sale of the tunnel never happened.

The mayor and city also have to deal with a rising deficit, although the mayor’s staff said there will be no deficit, as they’ve said in the past.

In the current fiscal year, the mayor’s team planned for a deficit of only $57 million of what came to be a $153 million gap at the end of the 2005-2006 fiscal year, between revenues and expenses.

The mayor will have to come up with a plan to get rid of $96 million short fall.

You can reach David Josar at (313) 222-2073 or djosar@detnews.com.

 

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~ by Keith A. Owens on April 12, 2007.

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