Detroit mayor presents budget with eye on easing oversight

By Serena Maria Daniels

DETROIT (Reuters) – Detroit Mayor Mike Duggan presented a fiscal 2016 budget on Tuesday to the city council, warning that any changes in the spending plan would need approval from the post-bankruptcy city’s oversight board.

Detroit exited its 17-month bankruptcy in December. A financial review commission, created under Michigan law, maintains control over Detroit’s spending until the city pays its bills and balances its budget for three straight years.

“Everything that we do is focused on how fast we can return self-determination to the city of Detroit,” Duggan told the council, saying the earliest that could happen is 2018.

The mayor said while he had little input in the upcoming budget, he was committed to making sure it is balanced. The fiscal 2015 and 2016 budgets were prepared by the city’s former state-appointed emergency manager, Kevyn Orr. Those budgets were based on assumptions in the city’s debt adjustment plan, which won federal bankruptcy court approval last year.

The plan allowed Detroit to shed about $7 billion of its $18 billion of debt and obligations and exit the biggest-ever U.S. municipal bankruptcy 2-1/2 months ago.

Duggan said he was “quite confident” the fiscal 2015 budget will be balanced. A preliminary forecast the city gave the review commission on Monday showed a balance of nearly $150 million when the fiscal year ends on June 30.

Property taxes for the current budget are slightly higher than expected, while plans are in the works to beef up collection of city income taxes. Still, Duggan emphasized that the city must remain conservative in its projections for the next budget.

“What we can’t do is send budget amendments to the financial review commission assuming those positive developments are going to occur,” he said.

The all-funds budget for the fiscal year that begins July 1 totals $2.8 billion and includes $1.07 billion for operations. That is down from the $1.35 billion operating budget of fiscal 2015, due in part to the reduction in bankruptcy costs, according to a financial plan given to the city council.

Hearings will be held on the budget ahead of the city council’s vote in March on the spending plan. The plan will be then be sent to the review commission.

(Additional reporting by Karen Pierog in Chicago; editing by Matthew Lewis)

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