Sunday, April 17, 2011

Detroit's 2011-2012 Budget, $200M Savings Needed (Mayor Dave Bing)

Detroit, Michigan - Source: Wikimedia
I'm following the financial situation in Detroit, as I have been for a while now. Not only is the City of Detroit a distressed municipality, there is also the possibility that the State of Michigan could intervene if there's a financial emergency. I linked to the the budget documents, FY 2010 Comprehensive Annual Financial Report and articles after the jump. I'm trying to find yields and recent trades on Detroit muni bonds through TRACE/MSRB databases on finra.gov. This is from Mayor Dave Bing's budget address:

"Good morning Honorable City Council. My budget presentation today marks the next step on the City of Detroitʼs path back to financial stability. We face challenges unlike any the city has ever seen, challenges that demand bold action and a business approach that this administration is prepared to take. We do not have the luxury of waiting for someone else to solve our problems.

Mayor Dave Bing
• We must find savings of $200 million in this fiscal year to present a balanced budget.

• If we do nothing, our deficit which today stands at $155 million will grow to approximately $1.2 billion by Fiscal Year 2015.

• Pension and medical costs are rising at an uncontrollable and unsustainable rate. From 2008 through 2011, the City of Detroit cut $40 million from service delivery to offset the rising cost of benefits.

• Without action, benefit costs will consume a larger and larger portion of our operating funds, potentially growing to 50% by 2015.

• Since 2000, revenue is down from $1.1 billion to $753 million. Our population is down more than 200,000 according to the recent U.S. Census report.

The evidence is clear. The same old budget gimmicks and the same old budget battles are not the solution. Itʼs a different ballgame and the stakes have never been higher. Governor Snyder signed legislation into law this year that gives the state an unprecedented ability to intervene in financially distressed cities like Detroit. The state has made it clear that any city that fails to address its financial issues on its own will have an emergency financial manager appointed.

The budget I am presenting today includes a five year plan to eliminate our deficit and more importantly sets a course to prevent a state takeover. It reflects the necessary balance of reducing government spending with our responsibility to provide services at a level our residents need and deserve. We are taking on tough issues like pension and medical costs while continuing to make city government run more efficiently."

Read more: City of Detroit - Mayor's Budget Address FY 2011-2012 - PDF
Documents:

Detroit's 2010-2011 Executive Budget (DetroitMI.gov)

Detroit FY Ending June 30, 2010 CAFR (pdf file)

Articles:

Detroit casinos' response to Bing's proposed tax increase: No dice (Crains Detroit)

Detroit must cut $200 million in spending or face a takeover by the state of Michigan, Mayor Dave Bing said on Tuesday (Reuters)

Bing pushes for benefits overhaul, casino tax increase in city budget plan (CrainsDetroit)

Going to pot? Outspoken lawyer, Geoffrey Feiger, says Detroit should (Chicago Tribune) -[do it. Thoughts?]

Detroit City Council approves $125 million bond sale to build Woodward rail line (Crains Detroit)

Detroit to send layoff notices to all its public teachers /layoff notices to all of the district's 5,466 unionized employees (Reuters)

Rochelle Riley: Bing needs to take bigger steps in city's financial crisis (Detroit Free Press)

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