This story has been updated.
Detroit Deputy Mayor Kirk Lewis is set to present a draft budget to City Council Thursday morning, a week after the city entered into a consent agreement to allow greater state oversight of its finances.
Lewis, who is acting as mayor while Mayor Dave Bing recovers from surgery, said the city is behind in this year's budgeting process, due to wrangling with the state over how to resolve Detroit's financial crisis. The city is expected to fall about $200 million short before the end of this fiscal year in June.
But the new consent agreement mandates Detroit balance its budget, and Lewis is expected to propose layoffs and deep cuts to put the city in the black.
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Under the agreement, the mayor has about a month to appoint a chief financial officer and project management director tasked with supervising city finances and operations. And state and city officials say they're already working to find nine people to fill the spots on Detroit's new financial advisory board.
These yet-to-be-named appointees will have veto power over city spending. Any budget must meet their approval, but the Detroit News reports they will lave less input in the 2013 budget, and a greater role moving forward.
In a YouTube video posted Thursday morning, Lewis called the consent agreement "the starting of a turning point for the city of Detroit."
"This was a real tough decision that the City Council and the mayor's office had to make but it was the right decision for the city of Detroit longterm," he said. Lewis admitted the coming budget and plans for city restructuring would be "painful" and predicted the city would go "up and down" over the next few years.
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UPDATE: 12:10 pm. -- Lewis said Detroit will have a $268 million deficit at the end of the fiscal year in June. The new budget looks to radically cut and restructure city government to balance the budget going forward and eliminate that deficit.
"Nobody wants these cuts, especially not the citizens who have already suffered," Lewis said. But these cuts are essential to ensure the city's long-term financial stability."
For 2012-2013, the total general fund budget is $160 million lower than the fiscal Year 2011-2012 budget. The city expects property taxes will drop, but income tax will rise slightly, thanks to a newly-passed hike in the corporate income tax. Overall, revenue will be down $23 million.
So the city will turn to cuts to balance the budget. Unions will be asked for further concessions, per the consent agreement, and the city will also look to cut spending in the following areas:
- 25 percent cut to the budget of mayor's office
- 10 percent reduction in pay for city employees through permanent furlough days
- concessions from suppliers
- changes to employee medical benefits
- pension-related concessions
- work rule changes
- 10 percent pay cut for police and firefighters
City departments will see an average 25 percent budget cut, while some will be consolidated or eliminated. Departments on the list for consolidation or elimination: Workforce, Health, Human Rights, Human Services and the Airport. Others may be outsourced to third parties.
"We're seeking funding from the corporation and foundation side to support recreation," Lewis said. "Companies and foundations are interested in supporting this process."
After all the cuts and consolidations, the mayor's office is projecting a $96 million surplus for the coming fiscal year. Some $75 million of that will go to reduce the city's deficit, said Chief Operating Officer Chris Brown. The projected budget would eliminate Detroit's structural deficit in three and a half years.
The budget still has to be vetted by the state.