Duggan calls for boost in public safety, reserve fund for 2020 budget
Detroit — Mayor Mike Duggan presented his first spending plan outside of state oversight on Thursday, calling for a major boost in the city's funding reserves to keep the city on its path of self-determination.
Duggan delivered his 2019-20 fiscal budget to Detroit's City Council, saying its the fifth straight balanced budget for Detroit and the first since he took office that's being delivered outside of control of an emergency manager or active financial oversight — and he wants to keep it that way.
To that end, the mayor stressed finances remain "tight" and proposed that $45 million be set aside for the city's rainy day fund to weather possible economic downturn in the coming years.
"The rainy day fund will be doubled," said Duggan, noting economic declines are inevitable. "What this city has never done is plan ahead and budget for it. That's our goal, to be conservative now so when things turn down, we won't be cutting police or firefighters."
The mayor laid out his $1.1 billion general fund budget plan on the heels of a State of the City Speech that focused heavily on his planned investments in the city's police force and fighting against violent crime in the city that ranks among the nation's most deadly.
Duggan said he'll boost the police department's budget from $321 million to $331 million, with the hopes of adding 70 more positions. This will include 30 detectives and other support staff, he said, calling the move "far and away the biggest (budget) increase."
Duggan said the staffing increase proposed is the result of the administration's request that departments identify five-percent savings that could be used in other areas.
The mayor this week also touted plans to build on Project Green Light, which has enrolled 500 businesses that pay a fee for high-definition interior and exterior video cameras and lighting. Surveillance cameras feed video to Detroit Police Department's Real Time Crime Center.
The suggestions were met Thursday with some skepticism from council members, including Raquel Castaneda-Lopez who raised concern over the increase of surveillance in city communities.
She said there have already been complaints from the immigrant, Latino and African-American communities of feeling a sense of being monitored too closely.
"I'm curious if you guys have done research beyond just the city of Detroit that looks at best practices if we are going to be expanding surveillance," she said. "... To make sure that people's rights are being protected."
Duggan agreed that privacy concerns are legitimate and something the city has an obligation to address.
"This is a debate that we should have, we're going to have and I welcome," the mayor said. "We have an obligation going forward to be clear on who has access to this and how long we keep it. It is going to take us a couple years to build this out."
Last year's budget came just ahead of the city's exit from state oversight put in place as a condition of its landmark bankruptcy.
The state-appointed Financial Review Commission voted last April to release Detroit from oversight. Until that time, the commission had the final say on all city budgets, collective bargaining agreements and contracts larger than $750,000 under a requirement that had been in place since 2014.
Duggan on Thursday noted the review commission "hasn't gone away," it's "gone dormant."
The mayor warned if the city runs a deficit, the commission would come back into play and the city would again be under active oversight for another three years.
Duggan told council members as they discuss budget priorities, "the most important one is this."
The mayor also told the council on Thursday that as federal funding for Detroit's Hardest Hit Fund demolition program is exhausted, the city will look toward a transition this fiscal year from a demolition effort controlled by the Detroit Land Bank Authority to a city-administered effort.
The city was provided $50 million per year toward demolition under its bankruptcy Plan of Adjustment.
"By end of the 2019 fiscal year, the land bank will be out of the demolition business," Duggan said. "As we all know, the land bank was never well suited to be running a major procurement and compliance program."
Even so, Duggan stressed the U.S. Treasury Department and state's "confidence" in the program, which has been awarded $275 million over five rounds.
Duggan's defense comes after a federal watchdog agency issued a new round of subpoenas earlier this year to certain demolition contractors as part of an ongoing criminal investigation into the city's federally funded blight elimination work.
Councilwoman Mary Sheffield noted that with shift to in-house demolition, she wants more assurances that Detroiters will be put to work.
"I want to make sure we address it now," Sheffield said, "to ensure Detroiters are being put to work."
Duggan added with the shift to a city-run demolition program, there will be more resources for neighborhoods not covered right now under boundaries carved out under the federal effort. He also said the city will have to ramp up from about 10 demolitions per week to a number that's closer to 70 or 80 per week.
"It's a pleasure for me to go into these neighborhoods and say 'you are now going to have money coming into your block,'" he told council.
While revenues are up about 3 percent — a $34.5 million increase in total — the city's fixed costs are growing by $35 million between pensions, debt service and collective bargaining.
Meanwhile, the city's income tax revenues have "gone up dramatically," the mayor told council.
The city's bankruptcy Plan of Adjustment assumed a 2 percent increase per year. Over the last five years, he said, the revenues have grown 5 percent. Duggan credited the bump to companies like Flex-N-Gate, Ally Bank and Sakthi Automotive Group.
The additional funding has aided the city in its ability to provide a 2 percent raise to nonuniform employees and 3 percent raises for public safety workers on July 1.
The city has posted balanced budgets, with surpluses, since its 2014 exit from bankruptcy. It's recent return to the bond markets for capital investment projects have earned it higher marks among rating agencies.
Detroit also has earned praise for its efforts to amass $335 million by 2024 to help deal with looming payments that will come due to its two pension funds.
The future pension obligations present one of the biggest financial challenges for the city in the coming years since its unknown whether the funding requirements will be larger than projected.