Detroit could soon be without state oversight
Detroit — The city is set to post its third consecutive balanced budget, positioning itself to exit state oversight this year.
Findings highlighted Thursday by the city in its Comprehensive Annual Financial Report show Detroit has steadied its finances after emerging more than three years ago from the largest municipal bankruptcy in U.S. history.
The state’s financial review commission could vote to waive its authority over the city as early as March or April, Detroit’s Chief Financial Officer John Hill said.
If the city does emerge from oversight, it would no longer need approval on budgeting or contracts, as it has since exiting bankruptcy.
“We believe we have met all the criteria for the waiver,” Hill said. “I believe this will be the last budget that will be done under the FRC’s authority.”
The Comprehensive Annual Financial Report was officially released by the city on Wednesday and covers July 1, 2016, to June 30, 2017. It supports predictions from local and state officials that Detroit would soon regain control of its finances.
Some of the highlights in the report include the city ending 2017 fiscal year with a $53.8 million general fund operating surplus and revenues exceeding expenditures by $108.6 million. The city had projected a $51 million surplus for the 2017 fiscal year, which closed on June 30. Detroit ended the 2016 fiscal year with a $63 million surplus.
The city’s general fund unassigned fund balance, meanwhile, will be $169 million, a $26 million increase from the previous fiscal year, according to the report.
Hill lauded the city for getting the out four months earlier than last year. He expects to present the results to the commission at a meeting later this month.
“It allows us to have a really good base of information as we are going into our budget process,” Hill said. “It also gives us a chance to address some of the items that are identified as things we need to work on.”
Hill said the city has shown vast improvements in its financial health.
Among the accomplishments are Detroit’s credit upgrade from rating agencies, its employment rate is up and property values are climbing.
Moody’s Investors Service in October upgraded Detroit’s rating and assigned a positive outlook, suggesting the possibility of future upgrades. The city’s economy “remains vulnerable” but is “showing real progress,” the agency said.
“I have to say that certainly there has been a positive impact from the financial review commission oversight,” Hill said. “It’s been a real constructive process where the city has excelled.”
Mayor Mike Duggan said in a statement that a third straight balanced budget proves his administration in partnership with city council can “effectively manage the city’s finances.”
“This is another big step forward and helps set the stage for the end of the active state financial oversight,” said Duggan, who is expected to present the city’s budget in late February.
Isaiah “Ike” McKinnon, a member of the financial review commission, also credited Duggan with getting the city’s finances back on track.
“I remember when Mike Duggan took over as mayor, we certainly had some hope and thoughts that things would happen,” McKinnon said. “I did not know that it would happen this quickly. This says a lot about what he’s doing and certainly working with the state.”