Mayor Mike Duggan delivers $3B Detroit budget with tax cuts, DDOT boost, homeless outreach

Yahoo

01-03-2025

Detroit Mayor Mike Duggan's last budget presentation as the city's chief executive Friday showcased a host of plans touting areas of growth and moves to solidify the city's future: a proposal for a significant property tax cut, increased bus service, more money and resources to combat homelessness and a clarion call to press state lawmakers to approve funding for Community Violence Intervention programs.
Duggan was all smiles walking into the City Council chamber, wearing his usual blue plaid suit jacket and shaking hands with some of the city's longtime leaders — even asking Detroit's Legislative Policy Division director whether he will miss him after years of working together to rebuild following the city's historic bankruptcy. This next fiscal year, which begins July 1 and runs through June 30, 2026, Duggan is proposing a $3 billion 2025-26 fiscal year budget across city funds, which includes the general fund and one-time funding.
"The day of my first budget presentation, half the street lights in the city were out, the parks were all closed, the ambulances didn't show up for an hour and there were 47,000 abandoned houses in this city. It was a city that didn't have a lot of hope. It is a very different city today," Duggan said.
Duggan took office in 2014 and was confronted with a multitude of important tasks, including balancing and growing the city's budget. And, by most fiscal accounts, he has been successful. But more than a decade later, Duggan has decided to leave the seat to pursue a run for Michigan governor as an independent party candidate. And his budget presentation included work that still needs to be done — including a couple of his pet projects — in Lansing that could benefit Detroit and other Michigan cities.
"I'm very conscious of the fact that I want to leave the future administrations a budget that has cushions against what may come," Duggan told City Council members.
That includes coming to an agreement on major developments, namely the proposal to demolish and redevelop parts of the iconic Renaissance Center.
Here are some of Duggan's budget takeaways:
Detroit is running $70 million ahead of projection in the current fiscal year, Duggan said. In fact, for the 11th straight year, Detroit will finish the fiscal year with a surplus, he said, adding the city is $22 million ahead in income tax revenue, $30 million in gaming tax collection and $7 million in property tax growth. The city also is $2 million under on expenditures.
Duggan's budget proposal would hold nearly $500 million in reserves, which includes $150 million for the city's Rainy Day Fund and $350 million in the Retiree Protection Fund, which sets aside money for pensions.
"This city is in good shape," Duggan said. "The reason we're financially strong is our income tax revenue performance.
"Those who were here during the Grand Bargain (the deal struck to pull the city out of bankruptcy) legislation know the state of Michigan required us to have a 5% reserve. By state law, we have to have a $75 million Rainy Day Fund. This council has supported a commitment that we've doubled that," Duggan said.
The city's income tax revenue has spiked since 2014, including the expected projections from that fiscal year. The Plan of Adjustment estimate projects the revenue to grow from $248 million to $370 million in 2026, with a 2% forecast for income tax growth.
"Instead, we have had extraordinary performance with business development and people moving in. We have actually averaged 7% a year, and we are going to have, this year, $470 million," Duggan said, adding the growth has led to giving police officers $10,000 in raises to their base pay, the hiring of more officers, the beautification of several city parks and reducing ambulance response times.
"In 2014, when I was required to testify in front of Judge (Steven) Rhodes in the bankruptcy court, he would not let the city out of bankruptcy unless I testified that I believed that the plan we have could be achievable in the next 10 years. And I committed to income tax growth of 2% a year for the next 10 years. That was a little bit of a leap of faith, because the income taxes had done nothing but decline," Duggan said.
Duggan did not move on without giving praises to City Council members for recognizing property taxes are "the choke point" in Detroit's development.
"When we have 86 mills, and the suburbs have half of that, almost nobody is going to build their business in the city and pay twice as much in taxes, which meant the only way we could recruit these companies was to give them discounts. And you've done it. Everybody up here has supported one or more of the projects that has done this," Duggan said.
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Duggan added that the city will be "fine" if it continues on the same course.
"We are going to have to — before the end of this year I hope — deal with one last issue, and that's going to be the Renaissance Center. I do not want to leave behind a (bad) legacy at the Renaissance Center, like administrations and councils did over the years with the Packard Plant, the (Michigan Central) train station or the Hudson's site. And we have to work through it to get an answer," Duggan said.
Duggan also proposed reducing the city's debt millage. Last year, it dropped from 8 to 7 mills, and this next fiscal year, he proposes cutting it from 7 to 4 mills. A mil is the tax rate applied to the assessed value of property. Each mil equals one dollar for every $1,000 of assessed value.
"Our property tax collections have been so strong, we are in a situation this year to do a 3-mil tax cut," Duggan said. "If you own a house that's $100,000, that's a $150 a year tax cut. ... This doesn't cut into any of our services, this is money saved because we paid off our past debt."
Duggan said more needs to be done to address the city's high property taxes, however, sneaking in a push for the next mayor to advocate for the Land Value Tax, which would tax vacant land owners at higher rates than those with homes or structures on their properties.
"One of the biggest savings that could possibly come, though, for property taxes and having relief for homeowners as well as business owners, will have to come from the operational side of things," Councilman Fred Durhal III, chair of the city's budget, finance and audit standing committee, said. "When we look at, again, our operational millage compared to other cities and municipalities, we're double what they are. And so some real, comprehensive tax reform will have to take place. We know those roads lead through Lansing, particularly, to be able to drive them down significant enough where folks can see a huge savings."
The mayor is proposing a nearly $20-million increase to the Detroit Department of Transportation's budget. This includes adding more buses and hiring at least 63 more drivers and 24 mechanics.
"Today, we're running 178 buses a day. When all buses come in … we'll be running 220 a day," Duggan said.
The mayor said it is necessary "for the kind of service we deserve" in the city.
Detroit reached its highest level of bus services before the COVID-19 pandemic with 214 buses running a day. By January, Duggan expects DDOT to run 220 buses, praising the new director for maintaining operations.
The city receives $6 million annually in federal funding for homelessness initiatives. The mayor and City Council members agreed to match it, bring the total to $12 million, which allowed the city to increase shelters and housing to 110 beds.
"As we learned in the tragic circumstances," Duggan said, alluding to recent events involving a homeless mother and her children sleeping in a van, where the children froze to death, "we need to do more."
Duggan is proposing an increase to $8.4 million from $6 million from the general fund to double the number of beds to 220 and add more outreach workers.
Councilwoman Angela Whitfield-Calloway asked the mayor whether the city's recreational centers could be an option as drop-in centers for those experiencing homelessness, given the potential anxiety some individuals may face approaching police. Duggan said the efforts go beyond police, that outreach workers are on the streets 24 hours a day, adding that a shortage of facilities is not the issue.
"At least in this case, the problem was communication, unfortunately. The services, I don't know if we communicated them as thoroughly as we should have. But, at times, we have turned to rec centers and I would say there are other council members who can tell you there is a significant problem in the community when they lose their rec centers," Duggan said.
Detroit's Community Violence Intervention initiatives, which aim to reduce crime, were federally funded through the American Rescue Plan Act. However, as that money fizzles out, Duggan is proposing using $4.4 million from the general fund to continue those efforts. The city chose six organizations to receive funding, five of which had "excellent success" at reducing violence, Duggan said.
The mayor added that state lawmakers attempted to approve a $75 million Public Safety Trust Fund, which would have provided about $18 million for Detroit. Duggan had planned to spend it on Community Violence Intervention programs, but the legislation did not make it past the Senate.
"You need an appropriation, and then you need to create a Public Safety Trust Fund that works like revenue sharing," Duggan said. "The $75 million is sitting in an account for public safety in the cities of this state, and it's going to sit in that Lansing bank account until the Legislature adopts the trust fund bill, and I'm hopeful that that happens soon. But right now, every city is being hurt by the fact this bill is not passed."
The mayor touted a drop in crime since the beginning of his tenure, but urged city officials to keep pushing for the legislation to pass.
"Either we get the public safety trust through or we are not going to have the kind of expansion of the CVI program that I'm pretty sure everybody in this room would like to see," Duggan said. "We have got to have the CVI folks on the ground in the neighborhoods, combining with the outstanding job the police department is doing with this work and its technology."
Durhal said he plans to explore increasing Duggan's proposed budget because the $4.4 million falls within the scope of work through the organizations, but not the performance bonuses they receive, if successful.
Dana Afana is the Detroit city hall reporter for the Free Press. Contact: [e-mail]. Follow her: @DanaAfana.
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This article originally appeared on Detroit Free Press: Mayor Mike Duggan proposes property tax cuts, in $3-bil Detroit budget