Plummeting casino, property and income tax revenues are forcing Detroit’s mayor to raid the city’s savings accounts and trim its workforce.
Mayor Mike Duggan says the city is facing a $348 million budget gap over the next 16 months because of the loss tax revenue tied to the COVID-19 pandemic.
For example, Detroit gets about 17% of its tax revenues from the city’s casinos, which have been closed since March. It’s unclear when the casinos will reopen.
The mayor is proposing emptying the city’s rainy day fund and redirecting other funding, including money earmarked for blight elimination, capitol improvement and transit, to seal most of the budget hole over the next 16 months. The city council will need to approve the use of the rainy day fund.
“If it isn’t raining now, I don’t know when it is,” says Duggan.
But that would still leave the city about $50 million short of filling the hole.
Duggan says hundreds of city employees will need to be laid off or scaled back.
The mayor is laying off 200 part-time, seasonal and temporary workers. He’s also slashing pay for some 900 employees by 90%, though they will be eligible for the city’s health care plan and other benefits tied to government pandemic relief.
“It is going to hurt. But we can handle it,” says Duggan.
The mayor himself and nearly 100 other top city executives making more than $125,000 a year will take a five percent cut.
Detroit police officers, firefighters, EMTs and DDOT bus drivers will actually get a boost in pay in the form of hazard pay.
Mayor Duggan says he does not want to do what past city administrations have done and tried to pay for the deficit with municipal bonds.
Duggan says he doesn’t want to put the city at risk of once again falling under state oversight. The city just emerged from active oversight in 2018.
Detroit is one of many cities in Michigan and around the country facing rising deficits because of the coronavirus outbreak.