When it comes to Detroit’s budget, Mayor Kwame Kilpatrick and his administration have their line and they’re sticking to it.
“A budget is based on certain assumptions,” Deputy Mayor Anthony Adams told reporters during a news conference last week. “We continue to be positive.”
The problem is that professed optimism stands in the face of assumptions already shown to be false.
The Detroit City Council unanimously rejected Kilpatrick’s fantasy-laden budget for this fiscal year and passed a spending plan it claimed was based in reality. But the council’s budget is also proving to have been based on much wishful thinking. And now the city is beginning to pay the price for those false assumptions, falling deeper into debt with each passing day.
Although Adams maintained during his press conference that that’s not the case — “We don’t think we’re falling behind,” he told reporters when asked if the deficit is growing — the city’s debt is actually increasing at a rate of at least $15 million a month, says Irvin Corley Jr., fiscal analyst for the council.
Detroit Auditor General Joe Harris concurs, saying Corley’s analysis “sounds like a solid number.”
About $5 million a month is being lost because council-approved cuts to the police and fire departments have not yet been implemented. Kilpatrick’s team says it is devising a massive reorganization of public safety operations to deal with that funding reduction, and that a plan is forthcoming — perhaps as early as this week. But even if those cuts are achieved, the city will continue falling deeper in debt, coming up short by $10 million a month or more.
Compounding the problem is what Corley and Harris say is a drastic underestimate of the debt being carried over from the two previous fiscal years. The Kilpatrick administration says that debt is about $60 million. Corley says the real figure is certainly more than $100 million and could be as high as $120 million; Harris predicts that it could be as much as $150 million. An exact accounting won’t be available until January.
The combination of accumulated debt from the past two years with continued deficit spending this year is increasing the likelihood that the state will have to take control of the city’s finances.
“If nothing happens by December, I’d say it’s real serious,” Corley says.
A number of factors are contributing to the flood of red ink mounting for the current fiscal year. Most significant are hoped-for concessions from the city’s unionized work force that have yet to materialize. Both the Kilpatrick budget and the revised plan passed by council were predicated on workers agreeing to a 10 percent pay cut and picking up a $47 million increase in health care costs by July 1, the start of the new fiscal year. Union leaders have said all along that they won’t accept a combination of pay cuts and higher health insurance payments.
If such concessions aren’t made, then far-reaching layoffs would have to occur to make up the shortfall. But with Kilpatrick facing a tough re-election battle, there is a political motive to delay issuing pink slips until after November. The problem is that continued delays mean increased debt, which will only create increased pressure to eventually lay off even more workers than would be the case if the situation were addressed immediately.
There are other massive holes in the current spending plan. One is the predicted sale of $40 million in city property. The administration has yet to identify exactly what property would be sold to generate all that cash. By comparison, Corley says, only $11 million in city-owned property was sold off last year.
“I don’t see where they’re going to get it,” Harris says about the projected property sales.
Like much of what the administration continues to say about the city’s budget crisis, that land appears to be nothing more than a fantasy island.
Nancy Kaffer is a Metro Times staff writer. Contact her at 313-202-8068 or [email protected]
