DETROIT (WXYZ) — For the 11th straight year, the city of Detroit is set to see a budget surplus. Mayor Mike Duggan announced Monday a projected $60 million surplus for fiscal year 2024-2025, which wrapped up in June.
But he says as uncertainty looms federally, next fiscal year may see some shortfalls.
Duggan says currently, the preparation they're doing for any potential shortfall is a precaution, as the city works to learn if recent changes in federal law via President Donald Trump’s Big Beautiful Bill and tariffs will affect the state law relative to city income tax.
The city is crediting department heads for the surplus. Duggan says for fiscal year 2025-2026, there could be a $16 million budget hole.
The mayor and city's chief financial officer say since adopting the budget in April, we've seen the passage of the Big Beautiful Bill, which included provisions that would impact the net profits for corporations, and if their net profits are down, so will be their payments.
We're also seeing ongoing impact of tariffs on the auto industry causing a significant drop in manufacturing, which in turn impacts profits.
It's the reason Duggan is recommending city council put $42 million from the surplus into a corporate income tax reserve fund, so Detroit can prepare.
“This is the first time since I’ve been here we've seen corporate profits go down. You've watched as we've built one manufacturing plant after another over the last decade. It does put you in a situation where something like tariff uncertainty can have a significant impact in a short period of time,” Duggan said.
The city is also making a legal challenge to clarify how the changes federally will impact Detroit.
But at this time, they say all other revenue sources, personal income tax, property tax and gaming taxes, are doing well.
