Detroit Mayor Duggan unveils key priorities as city faces tight budget

Detroit — Mayor Mike Duggan warned of a tight city budget on Friday but proposed more money for the city's elections office, police force and recreation department.

Duggan also allocated more funding for affordable housing, expungement programs and ensuring Detroiters get fair opportunities in recreational marijuana entrepreneurship, he said as he proposed his 2021-22 fiscal year budget to Detroit's City Council.

Duggan stressed as he detailed his $1.1 billion general fund spending plan that the city regained local control of its finances three years ago when it emerged from the strict oversight of the Financial Review Commission put in place as a condition of Detroit's bankruptcy. The city's overall proposed budget is $2.3 billion budget for 2021-22.

The mayor's spending plan for the fiscal year that begins July 1 comes after Detroit endured more than $410 million in COVID-induced revenue losses over a 16-month period.

"We can't budget on hope," Duggan told the council about the revenue losses the city suffered from COVID-19. "We have to budget on reality."

Duggan last spring laid out aggressive budget cuts to stave off a $348 million shortfall from March 2020 to June of this year. In the fall, the deepening economic downturn as COVID-19 cases spiked again resulted in another $62 million in losses.

To better position the city, the mayor is proposing a one-time infusion to restore $50 million to the city's rainy-day fund and a $30 million supplemental deposit be added to the scheduled $55 million in contributions to the Retiree Protection Fund. 

"Everybody here remembers the pain that our pensioners went through, after having given their careers to the city of Detroit and having their retirement benefits reduced," Duggan said. "We can never let our retirees be in that situation again. We have not had stock market performance as high as the original projection and so there is a need for us to put more money into this fund to protect the retirees."

Councilman Scott Benson said he was glad to hear of the $85 million contributions proposed for the Detroit pensions since the investment returns aren't meeting projections. "I do not want to break that promise to our pensioners," he said.

Returning to work

Between March and May of last year, 65,000 Detroit residents - or about 10% of the city's population - were out of work during the pandemic.

The city is depending on casino revenue returning to normal and more people returning to work in the city by the summer to improve the collection of income taxes.

People who worked but did not live in the city and pivoted to remote work during the pandemic account for a $23 million fiscal year hit, which occurred in the last quarter of 2020, and a projected $84.9 million loss in 2021, said Deputy Chief Financial Officer and Budget Director Steven Watson.

"We're expecting a substantial income tax loss specifically from non-residents," Watson told the council. "We're assuming that there'll be a permanent 10% loss in income tax from people continuing to work remotely..., starting at $15.6 million in 2023. And that's basically the equivalent of about half of our non-resident income taxpayers working from home even just one day a week."

Watson said there's a lot of uncertainty ahead about what the workplace will look like and the administration is monitoring the situation "very closely."

"Detroit should return to 2019 employment levels by about 2022," Watson told the council. "The state won't return to its employment levels until 2025. So areas surrounding Detroit will really recover slower in terms of jobs than Detroit payroll employment does."

Councilmember Gabe Leland says he's "not so optimistic" that workers will return to jobs in-person at offices downtown.

"I've been personally told by CEOs of large companies that they're never bringing some of their full-time employees back to headquarters," he said. "What confidence do we have that our income tax system is set up to be able to properly crunch the numbers for people working for companies that reside in the city of Detroit or for those that work outside the city of Detroit?"

Duggan said the city's collections strategy is much improved and Detroit has "built significant assumptions in reductions in those collections because of the work from home into this budget."

Councilmember Janeé Ayers said she hopes the law department will be brought back first, to "get back to the essential work we desperately need them to do."

Benson asked when the 1,000 employees who have been furloughed can expect to return to work

"I would like to bring all 1,000 people back," Duggan said. "And the reality is going to be this: the budget you have in front of you balances with the timeshare and furloughs in place."

Most of the increased expenditures to the general fund are for employee pay raises scheduled for July 1, Duggan said. Last July, nearly all of the employees didn't have a choice and had to give up their pay raises. Duggan said he didn't want them to miss out on another.

The mayor says if revenues start rising, they will start bringing people back in order from most essential to least essential.

Last year, Duggan focused on pumping more dollars into raising police officer pay, expanding animal control and making a one-time infusion into the city's rainy day fund and retiree pension trust.

Proposals 

The mayor is proposing a 17% increase in the clerk's budget because "The way that the elections are held has changed dramatically," Duggan said.

Because of the shift in mail-in voting and "phony claims and attacks" last year, the office is in need of increased staffing to handle the high volume, he said.

He's also proposing a $1 million increase in Detroit Police Department for a mental health initiative. The department started a collaboration with the Detroit Wayne Integrated Health Network to aid police officers when they are responding to mentally ill residents. Duggan said the partnership being done in two precincts is going well and he would like to expand it to include all precincts.

"There are a number of cases where a police officer does not begin to have the kind of training to deal with the behavioral issues that are there or to be able to diffuse them without having to resort to law enforcement tactics," Duggan said. "We would like to extend the mental health joint police mental health professional response to all the precincts in the city to try it."

The budget calls for a 2.5% pay raise for Detroit police officers, an additional $1 million to resume the police cadet program and $500,000 for Shot Spotter, a gun detection system and forensic technicians. Duggan told councilmembers he does not support reducing the police department's budget.

The proposed budget calls for $3.5 million for home grant repairs, $3.3 million for the Affordable Housing Development and Preservation program to assist with down payments.

There's also a more than $3 million increase for public transit to increase services and fund more transit police officers. People who spoke during public comment advocated for bus fares not to resume on March 15.

Another $10 million is being slotted for workforce training and business support including $3.5 million for Grow Detroit's Young Talent program; $1.3 million for Homegrown Detroit business support and staff; $3.1 million for Detroit at Work job training and support; $2.5 million for Motor City Match.

There will be an additional $1 million for the Civil Rights, Inclusion & Opportunity Department as the department reviews applications for its Legacy Detroiter ordinance over the next year. 

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"Councilman (James) Tate and Council have made a commitment, which we're now going to fight in court but I feel good about our chances that say if there are going to be recreational marijuana businesses in the city, 50% of those will be owned by Detroiters," Duggan said. "We are setting up a process where legacy Detroiters get properly evaluated, get first shot. It's going to take a major lift from the CRIO department."

The mayor also highlighted $400,000 for doubling Project Clean Slate expungement, which provided lawyers to 600 returning citizens last year.

"In many cases, they saw significant increases and their income got better once they no longer had to answer the question if they had a criminal conviction," Duggan said. (The requirements) have been dramatically loosened so people have had two felonies, people have multiple misdemeanors are eligible, which means there are thousands of Detroiters who have the potential to get their records expunged that didn't a year ago, they need lawyers because it's a complicated thing to get an expungement. It costs you three or $4,000 to hire a lawyer."

There's also $250,000 for Goal Line, afterschool transportation for Detroit students, and $210,000 for Earned Income Tax Credit support.

To address blight, the mayor's proposing $12 million for beautification including $6.5 million for commercial corridors, murals, land bank properties and graffiti removal. There's also $5.4 million for the second year of the Alley Cleanup Program that aims to tackle 2,000 blocks in 2021 and aims to get 7,000 alleys cleaned over a three-year period.

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Outside the general fund, the Department of Public Works is proposing funds that will allocate for 4,500-speed humps and neighborhood streets across the city, Duggan said.

"The speeding traffic has been a terrible risk to the children in this community. The speed humps have turned out to be enormously popular and another 4,500 spread to 3,700 sites, blocks across the city, I think is a really good step," Duggan said.

srahal@detroitnews.com

Twitter: @SarahRahal_