Detroit Facing Deficit Exceeding $300 Million, Mayor Forced to Make Cuts

Tuesday, Mayor Duggan said the city is facing a projected $348 million deficit over the course of the next 16 months. To address this, in a live news conference, Duggan announced budget cuts, the brunt of which will be felt by city employees.

The current pandemic has put Detroit in a tough spot financially and despite rainy day funds, the mayor said,

“There’s no way around the fact that the last $50 million are going to have to come from the men and women delivering service in this community.”

High ranking officials are taking a five percent pay cut in addition to approximately 200 temporary city workers being let go. About 900 workers, such as traffic controllers, will receive a 90 percent pay cut. Others, like city accountants, are receiving a 20 percent pay cut.

First responders and police officers will not be impacted along with employees of agencies not directly under the city’s control like the Detroit Water and Sewage Department.

Cuts go into effect April 20. Health care coverage will remain for all employees.

Budget cuts will enable the city to keep essential services such as garbage collection and maintaining public safety.

“If we do not handle this deficit ourselves, the state of Michigan is going to be running this city again,” Duggan said alluding to the state previously overseeing Detroit’s finances after the city filed for bankruptcy.

Duggan will not seek outside funds to help balance the city’s budget.

COVID-19 essentially eliminated some of the city’s largest revenue sources. With casinos closed, under Governor Whitmer’s order, the city cannot collect anticipated casino taxes. Income tax revenue is also expected to be lower with unemployment skyrocketing.

Budget cuts are expected to extend beyond just Detroit and reach the county level.

“The effects of the COVID-19 pandemic will be felt for months and even years to come,” Wayne County Executive Warren Evans said in a statement. “Wayne County faces many of the same economic realities as does its largest city.”

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