City budget blots out red ink

M.L. ELRICK AND BEN SCHMITT

April 13, 2002

FREE PRESS

First Budget Proposal

• Detroit Mayor Kwame Kilpatrick's first budget proposal freezes salaries, calls for the Belle Isle Zoo to be closed this summer and relies heavily on cash from the city's three casinos.

• "I wish I could present a rosier picture to you here today," the mayor told the City Council Friday morning. "Detroit is a city with tremendous needs, but our financial resources at this time in history are very limited."

• Blaming an economic slowdown and a deal with state lawmakers that reduced the city's income and business tax rates, Kilpatrick said his first challenge in crafting a balanced 2002-03 budget was eliminating a projected $75-million deficit in the current budget.

Reductions

• Kilpatrick said he must cut the city's $1.5-billion general fund budget by $69 million, which he called the first reduction in a city budget since 1993. Money for the general fund, which pays for city services, comes mainly from taxes. The city's overall budget will increase from $3.4 billion to $3.7 billion. The increase is due primarily to the sale of bonds for water and sewer projects.

• He proposed to close the gap through a combination of budget trims, spending freezes, higher-than-expected casino revenues and cash from the deal he announced last month on permanent casino agreements. But the City Council, which has say over the budget, has yet to approve the casino deal. Under it, the casinos would bring the city an additional $100 million over the next two years.

• City workers bear the brunt of Kilpatrick's spartan plan. He said the only way to avoid widespread layoffs is to skip raises this year and next. Contracts for most city workers expired in July.

Economics

Base is lower than expected.

Base

$

Rev

Exp

Shortfall is made up by

one time casino bail-out

reduce expenditures