By Charles Sercombe
A perfect storm of financial setbacks means the city has to raid its budget surplus.
City officials passed a budget for the new fiscal year, which starts July 1, that includes (for the first time in several years) going into deficit spending – for a total of $2.1 million.
But fortunately, the city has a budget cushion of $6 million to absorb the hit.
Initially, the deficit spending was going to be at $1.8 million, but the city council decided it wanted to continue the city’s alley repaving program and budget for likely lawsuit costs and settlements.
The alley project was given $200,000 – down from $300,000 last year.
And instead of adjusting the budget later in the year for lawsuit settlements, the council agreed to pencil in that cost – estimated at $100,000 – now instead of later.
Those additions pushed up the total to $2.1 million in deficit spending. The city’s total budget is $17 million. Almost half of that is spent on police and fire services.
Up until now, the city had been operating not only with a balanced budget, but was also enjoying certain savings that fed into a growing budget surplus.
But the good times appear to be over.
One of the leading causes for the setback was the loss of a federal SAFER grant that covered the salaries of 14 firefighters. Last year that totaled $500,000, said City Manager Kathy Angerer.
Federal terms of the program have changed this year to favor non-full-time departments.
Other increased costs included higher employee salaries (which were set into their union contracts), health and pension costs, among other items.
In the meantime, city officials are also bracing for a loss in revenue from the GM Poletown Plant, which is scheduled to close down in January.
That will mean a loss of about $850,000 a year that GM pays in lieu of property taxes. The agreement for the payment depends on whether the plant is in production.
In a couple of years, the city will likely be hit with a loss of $1.1 million a year from the Wayne County jail currently operating here on Conant. A new jail is being built in Detroit for the county to consolidate all of its jails.
Those revenue losses will be staggering to say the least. The state Treasury Department is helping the city administration look for alternative revenue sources, and how to redevelop the Poletown and jail sites.
May 31, 2019