No surprise here, at least not for anyone that understands how money works (ie. you can’t spend what you don’t have). The budget proposal would result in $250 million from the Detroit city budget being cut, and result in the loss of over 2,500 city jobs.
The budget includes massive cuts to the departments of health and wellness, work force development, human services and the City Airport. It also includes a 10% pay cut for police, although it doesn’t appear any jobs will be lost there. Some of the cuts will come from attrition and retirement, with the rest coming form layoffs.
Expected cuts include a $13.2 million cut to the public works department, a 16% reduction to the finance department, a 53% reduction in administrative hearings costs and a 41% reduction to human resources. Additionally, the law department would be cut by 55% and the mayor’s office would be cut 44%.
The fire department’s budget would be decreased to $160 million, and would lose about 150 jobs. Last week we covered a story on the massive reduction of street lights in Detroit, which isn’t expected to help with the little arson problem we have in Detroit either.
The budget would also completely eliminate the workforce development and health departments. The goal is to create an authority of some sort to run both areas beginning July 1st. The city is also expected to eliminate the City Airport, either through a transfer to an authority, or possibly through a joint venture of some sort. Hopefully this means it will no longer be named after the criminal mayor that helped do so much damage to the city of Detroit.
Under this budget, it is expected that by the end of 2015 the city would actually have a budget surplus of $240 million, after years of running at enormous deficits. Once the finances are back under control, that budget surplus could be used to hire more police and provide better services to Detroit residents.
In the short term though, expect there to be a lot of angry people that don’t understand where money comes from, and will not accept the fact that the city is broke and cuts must be made. The city will not be able to provide the same level of services with such a reduced budget. With the consent agreement in place, expect some people to point the finger at the State, not realizing these cuts are necessary medicine after years of financial mismanagement by city leaders.
Detroit Department of Transportation is also expected to lose almost $12 million from its budget, and Council President Charles Pugh has concerns that the DDOT may not even be able to function with such a small budget.
All of this budgeting may not matter in the end if the city is forced to swallow the penalties from its ill-advised interest rate swaps. Those are the ticking time-bombs waiting to explode and drag Detroit down into bankruptcy, and city leaders are pretending that they’ll go away if they just don’t think about them. Unfortunately, things are going to get worse, before they get better.