Duggan: Passing $2B budget would end state oversight

Nicquel Terry
The Detroit News

Detroit Mayor Mike Duggan presented Friday a $2 billion budget plan to City Council that he said would help end state oversight if approved.

Duggan said after this balanced budget proposal, he expects the state-appointed Financial Review Commission to exit as early as this spring. Detroit Chief Financial Officer John Hill has said the city and state Treasury expect to certify the financial audit verifying the surplus by March or April, giving the city three straight years of surpluses and triggering the end of state oversight.

“Once we get this budget passed, we have the opportunity to get out from active state oversight,” Duggan told the eight council members. “I don’t have enough good things to say about the way the administration and council has worked together.”

The mayor made the declaration as he presented a budget blueprint that seeks to hire another 141 police officers and double the number of derelict commercial structures that are torn down.

The end of state oversight would come a little more than three years after emerging from the largest municipal bankruptcy in U.S. history. Last month, Michigan Treasurer Nick Khouri, who chairs the review commission, said the city of Detroit was close to posting its third straight budget surplus.

In approving the “grand bargain” that helped pave the way for the city to exit bankruptcy in December 2014, Michigan legislators required that a financial review commission oversee the city’s finances, including budgets, contracts and collective bargaining agreements with municipal employees.

Duggan noted Friday that the Financial Review Commission would not entirely end but go into a “dormancy period.”

“They do continue to review our finances, and if we in the future run a deficit, they come back to life and it takes another three years before we can move them out,” the mayor said.

The city’s general fund — budgeted at $1 billion — continues to do well because income tax revenues are increasing, Duggan said. They are projected to rise 2.7 percent for the coming fiscal year and add another $6 million to $7 million to the city’s coffers.

City officials say the hike in income tax revenue is the result of more aggressive enforcement of corporate taxes and cracking down on people who weren’t filing their city tax returns.

“Our income tax revenues continue to grow ahead of what anybody would have projected in the bankruptcy now ... almost $300 million, and that’s what’s allowing us to deliver the services that the residents in the city are seeing,” Duggan said.

The proposed budget includes an $8 million boost to the city’s Police Department budget to create 141 new full-time positions.

Hiring more police officers, Duggan said, would allow the city to expand its Project Green Light and Ceasefire crime-fighting programs.

Businesses pay between $4,000 and $6,000 to cover the cost of installing high-definition cameras and lights on site and join Project Green Light, a program that allows police to monitor businesses’ video surveillance feeds in real time. Participating companies are given Priority 1 status on police dispatches — but some business owners who don’t participate feel they’re being treated like second-class citizens.

Duggan said the city struggled to fill Police Department vacancies until about two years ago when City Council passed a new contract. Detroit has since hired 500 new officers, he said.

“This city is not nearly where it needs to be for safety,” Duggan said.

In addition, the mayor said his budget allows Detroit to double the rate of commercial demolitions with a goal of having all “unsalvageable” buildings on major streets razed by 2019. That would put the city on track for cleaning up its commercial corridors, he said.

City spokesman John Roach said the goal is to jump from an average of 150 commercial demolitions annually to 300 starting this year.

Detroit has also razed thousands of blighted homes under the Duggan administration with federal dollars from the Hardest Hit Fund. The budget allocates $100 million of the unassigned fund balance to blight remediation — including the commercial demolition — and capital projects, which is double the money allocated last fiscal year.

The city remains under federal investigation for possible misappropriation of federal money because of questionable bidding practices. Duggan has conceded the program has made “mistakes” but said everything was done with the best of intentions.

Duggan administration officials have said they would cooperate with any probe and said any city employee who has done something wrong should be punished.

Other budget plans include more funding for summer jobs programs and Detroit At Work; neighborhood redevelopment plans for areas such as Delray, Osborn, Cody Rouge and East English Village, and boosting animal control so it can operate seven days a week.

Hill said Detroit can maintain a $62.3 million budget reserve, which exceeds the state’s $53.6 million requirement.

Councilman Scott Benson said the mayor presented a “conservative fiscal budget” that allows Detroit to live within its means.

Benson said prior to the meeting that he hoped the budget would address funding for poverty and neighborhood revitalization. However, council members received the budget 20 minutes before the meeting and Benson said he needed more time to review it.

“We’re seeing some good things,” Benson said of Duggan’s proposals. “But I want to dig into the numbers and actually go through it with a fine-tooth comb.”

Officials said City Council has until March 9 to approve the budget.