Detroit reports a lift in estimated tax revenue

Detroit raised its revenue estimates this week, as city finance officials tout their stewardship of the Motor City eight years after its exit from Chapter 9 bankruptcy.

General Fund revenue estimates total $1.28 billion in the current fiscal year, up $31 million from the previous conference estimates, according to Monday’s Revenue Estimating Conference.

“The steady growth projected for Detroit’s economy is reflected in the stability and growth in our revenue forecast,” said Chief Financial Officer Jay Rising. ”We will continue as in prior years to provide fiscal stability through balanced budgets that protect Detroit’s ability to fund its obligations while further improving the quality of life for Detroiters.”

The city of Detroit raised its revenue estimate by 2.5% this week, citing strong wages driving income tax collections.

Bloomberg News

The upward revision in estimates cites stronger tax collections concluding the previous fiscal year, continued economic growth and stability, and revenue sharing increases provided in the state budget enacted in July.

Income taxes continue to lead revenue growth in future years, the forecast said.

State law requires Detroit to hold independent revenue conferences in September and February each fiscal year to set the total amount available for its annual budget and four-year financial plan. 

This week’s estimate is up 2.5% from the previous conference estimate in February 2023. The fiscal 2024 estimates also include an additional $25.8 million of non-recurring revenues, primarily from short-term investment earnings. 

The conference said the projected increase is led by income taxes amid steady growth in jobs and wages in the local economy. The out-year forecasts for fiscal 2026 through 2028 show continued overall revenue growth of about 2% per year.  

The estimates will be used to put together a fiscal 2025 budget and the next four-year Financial Plan.

The conference members are Rising, the Detroit CFO; Eric Bussis of the Michigan Department of Treasury; and George A. Fulton, a University of Michigan economist.

The city’s bonds remain at speculative grade, but a steady pattern of upgrades, the most recent in April, have Detroit just one notch below investment grade, with a Ba1 rating from Moody’s Investors Service and a BB-plus rating from S&P Global Ratings. Both rating agencies assign positive outlooks.

The city reported receiving more than $3 billion in orders for its last foray into the bond market, when it sold $100 million of voter-authorized general obligation bonds in July to speed up blight removal and fund parks and transportation projects.

The city also in June won a court ruling knocking down a challenge to the pension funding plan that was approved in its bankruptcy exit plan.

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