Detroit 2012-20013 budget: Correcting the lingering deficit issues

Detroit’s 2012-2013 budget will result in significant restructuring to restore the financial stability of the State’s largest city.

Cities in Michigan and across the nation are struggling to balance budgets and to provide critical core services for their constituents. Many communities have been in a financial freefall as property taxes and state revenue sharing declined and employee benefits increased – then there’s the elephant in the room called “unfunded pension” and “health care obligations.” The net result is less money for basic services like police and fire protection; Michigan’s largest city is no exception.

In Detroit’s 2012-2013 budget, the city will eliminate 2,500 positions and will reduce its operating budget by $250 million dollars. Their goal is to significantly reduce costs and to better align revenues with expenses.

The approved budget will take effect July, 1, 2012. As challenging as the process of developing such a budget is, the real challenge will be its implementation. The new budget will result in some services being outsourced to non-profit organizations. City departments will see a decline in their overall funding levels and foundations and community-based organizations will be challenged to work more closely with the city to provide such services as recreation.

For a full review of the impact of the City of Detroit’s 2013 budget see Michigan State University Extension’s most recent Frequently Asked Questions on the Detroit consent agreement and the city’s financial issues.

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