Detroit revenue estimates conservative post-bankruptcy
Detroit — The city on Friday convened a state-mandated revenue estimating conference to outline a conservative forecast for the money it expects into its general fund in coming years.
Detroit Chief Financial Officer John Hill chaired the conference, the first since the city’s December exit from bankruptcy. Hill said the process is a major part of Detroit’s overall financial plan, which calls for a four-year balanced budget.
The revenue estimates laid out Friday were relatively flat and holding steady.
“It’s a very detailed and refined process to make sure that we create a balanced budget,” Hill said.
The estimates peg the general fund revenues around $1.39 billion for the 2015 fiscal year, up slightly from the $1.35 billion laid out in former Emergency Manager Kevyn Orr’s two-year budget plan.
The 2016 fiscal budget estimate is $1.08 billion, lower than Orr’s $1.16 billion projection. The 2017 fiscal budget is projected to be $1.039 billion.
The revenue discussion, which included Jay Wortley from the state Treasury Department and University of Michigan economist George Fulton, is the first of two required annually under state legislation passed last year. Wortley and Fulton accepted the projections as “conservative” and “reasonable,” but they, along with Detroit officials, noted revenue projections aren’t without challenges.
The estimations will go before the Financial Review Commission and are adopted in advance of Mayor Mike Duggan’s annual budget presentation to the City Council on Tuesday.
More than 60 percent of general fund revenues are f income, property, wagering and utility taxes, plus state revenue sharing dollars. The remaining 40 percent comes from sales and service fees.
Carol O’Cleireacain, Detroit’s deputy mayor for economic policy planning and strategy, stressed Detroit’s income tax, the city’s largest general fund revenue source, depends heavily on the degree of compliance with the rules.
The city collected more in income taxes in the 2014 fiscal year than it had estimated. The consensus for 2015 assumes no growth over the prior fiscal year, and factors in 1 percent growth for the 2016 and 2017 fiscal years.
Beginning in tax year 2015, the state will collect Detroit’s income tax.