CRC report details the city of Detroit's declining fiscal condition

Citizens Research Council of Michigan has released a report examining the Fiscal Condition of the City of Detroit.

The "Great Recession" that began in December 2007 has exacerbated the effects of population loss, poverty, and disinvestment on the City of Detroit. The tax base, already stressed, has deteriorated significantly, as the number of businesses and jobs has declined, unemployment has increased, and population has dwindled.

The recently published Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2007-08 (FY2008) indicates that the city's general fund deficit increased from $155.6 million at the end of FY 2007 to $219.2 million at the end of FY 2008. No CAFR is available for FY2009, but city officials budgeted a $280 million prior years accumulated deficit for FY2010, and they estimate the current year general fund operating deficit to be in the range of $100 million. The Crisis Turnaround Team appointed by Mayor Bing to assess city operations and make recommendations estimated that, absent major changes, the city's average annual (structural) deficit for Fiscal Years 2010 through 2112 would be $260 million.

The current City of Detroit budget was balanced by including $275 million in revenues from the sale of future city revenues from the Detroit-Windsor Tunnel, Municipal Parking Department, and Public Lighting Department. It is highly unlikely that these budgeted revenues will materialize. Detroit imposes a high tax burden on residents, property owners, and those who work in the city, but revenues from municipal income, property, utility users' excise, and casino wagering taxes will fall significantly below the amounts included in the budget. Further, reductions in state revenue sharing will exceed the reductions budgeted.

It is unlikely that state financial resources will be made available to address the city's crisis, and no federal assistance has been, or is likely to be, made available

The report and its summary can be read on the CRC website, www.crcmich.org.