Coronavirus Budget Address

City of Detroit Mayor Mike Duggan

April 14, 2020

AmericahasneverseenanythingliketheCoronavirus

Only1monthago,onMarch13,Detroithaditsfirstcase

Inthemonthsince,thepainsufferedbyourcommunityhasbeenenormous

Wehavelost424Detroiterstothisdisease.Wehavelost8ofourfellowcityemployees:3fromPoliceDepartment3fromBSEED1fromFireDepartment1DDOTWehavelost26Detroiterslivinginnursinghomes.

Atfirst,Detroitgothitashardandasfastasanycityinthecountry

AndwequicklylearnedtheaverageDetroitercouldn’tgettested.

Somethoughtwewouldbeoverwhelmed.

InMarch,therewereonly125CoronaviruslabtestsbeingdoneeachdayintheenSreStateofMichigan

WhentheysaidtherewasnolabcapacityinMichigan,JamieDimonandJPMorganChasehelpedusstrikeadealBioreferenceLabsofNewJersey.

Whentheysaidtherewerenomedicalstafftotakethetests,wepartneredwithHenryFordHospital,DMC,TrinityHealth(St.Joe’sandSt.Mary’s),andWSUMedicalSchool

Whentheytolduswecouldn’tstartbecausetherewerenolabkitsforus,Dr.RobertoRomeroandtheNIHmadeupspecialtesSngkitsforusintheprenatalcarelabs.

WhentheysaidtherewerenodoctorstowriteprescripSonsfortheuninsured,werecruited30DetroitofficestotakenewpaSents.

Whentheysaidtherewasnowaytotestthosewithoutcars,wegotGaryTorgowandTCFtoprovide$2ridestothetestsite.

Andwe’vebeenoperaSngoneofthemostsuccessfuldrive-thrutestsitesinAmerica.

WeDidOur8,000thDriveThruTestToday

Whenourpoliceforcewashithardbythevirusandhadmorethan600officersquaranSned

DetroitbecamethefirstcityintheU.S.togetinstanttests

Wehavebeenabletoreturnnearly1,000policeofficers,firefighters,EMT’sandbusdriverstoworkWehavealsofoundnearly200whotestedposiSveandwereabletogetthempropermedicalcare

Detroithasnowdone2,000instanttestsin2weeks

We’vetestedWayneCountySheriffsDepuSestomakeitsaferforthemtoworkinthejailWe’vedonetesSngforMichigancorrecSonsofficersWe’veacSvelycaredforthoseathomelesssheltersandnursinghomes.We’vetestednearly4,000ofourneighborsinWayne,Oakland,andMacombCounSes.

DetroithassteppedupasaleaderfortheenSreregion

TheCityhasbeenbackedby100partners

AAA Ajax Paving Ally Financial Big Sean BN Bahadur Boji Group Camelot Venture Group Community Foundation for Southeastern Michigan Detroit Medical Center Foundation Detroit Pistons Detroit Public Safety Foundation Detroit Red Wings Detroit vs Everybody Diversified Members Credit Union DTE Energy Facebook Faircourt Dental Fiat Chrysler Automobiles

Gary Torgow General Motors Google Gretchen Valade Humanity Forward Huntington Bank Hyundai ITC Transportation Company Knight Foundation Lear Corporation McGregor Foundation Mercedes Benz Financial Services MGM Grand Detroit Mitch Albom New Economy Initiative North American Chinese Coalition and the Asian Chinese Coalition of Detroit

Quicken Loans Quicken Loans Community Foundation The Kresge Foundation The Rockefeller Foundation Tony Michaels and the Parade Company United Auto Workers (UAW) United Way for Southeastern Michigan WSP

FUNDERS

Whohavebeenwithuseverystep

Accenture Accounting Aid Academy Angel Share BioReference Laboratories Black Theatre Network Central City Integrated Health (CCIH) Community & Home Supports Detroit Corporation of Supportive Housing (CSH) Detroit Area Agency on Aging Detroit Economic Growth Corporation Detroit Food Policy Council Detroit Medical Center Detroit Rescue Mission Ministries DTE Foundation Flash Delivery Forgotten Harvest Henry Ford Health Systems Henry Ford Hospital Hilton Garden Inn Detroit Homeless Action Network Detroit (HAND)

InvestDetroit JP Morgan Chase Metro Solutions Michigan Health Information Network National Black MBA Association - Detroit Ramada by Wyndham Southfield Salvation Army SEMHA (Southeastern Michigan Health Association) Shopify Southwest Housing Solutions CAM TechTown Trinity Health Wayne State Medical School Wayne State University Physicians Group Dr. Roberto Romero and the Wayne State University Perinatal Research Branch Wayne, Oakland, and Macomb Counties

PARTNERS

ThepeopleofDetroithavestronglysupportedoursocialdistancingmessage.

The1,000bedemergencyfieldhospitalopenedlastFridayattheTCFCenter,expecSng250paSentsthisweek.

Asofthisacernoon,theyhave8paSents.

ButwhilewearestarSngtosucceedrightnow,wecannotletupandreturntooldhabits.

CityofDetroitBudgetProcess

DetroitFiscalYearrunsfromJuly1–June30.

ForFiscalYear2019-20,weareinthe4thquarteroftheyear.

ForFiscalYear2020-21,DetroitCityCounciliscurrentlyconsideringnextyear’sbudgetwhichmustbeadoptednextmonth.

AswebagletheCoronavirusitself,wealsohavetobagleamajorbudgetdeficit

TheStateFinancialReviewCommission

TheStateFinancialReviewCommissionwassetupbystatelawin2014andhadpowertoapproveallcitybudgets,laboragreements,majorcontracts,debtissuance,andcitypolicies.

ThelawallowedDetroittogetoutofacSveoversightifwemetrequirementsfor3straightyearsforbalancedbudgets,promptbillpayment,properaccounSng,compliancewithStatelaws,andbalancedfouryearplan.

InApril,2018,DetroitmetthosecondiSonsandacSvestateoversightwasended.

However,ifwerunadeficitinasingleyear,acSvestateoversightgoesbackintoeffectfor3yearminimum

AnnualCityBudgetFY19-20TotalGeneralFundBudget:$1,086Billion

TotalEmployees:8,000Employees

(notincludingDWSD,36thDistrictCourtandLibrary)

BudgetedSourcesofGeneralFundRevenue

IncomeTax $324Million 30%

RevenueSharing$204Million 19%

CasinoTaxes$184Million 17%

PropertyTaxes$115Million 10%

Fees,OtherRev.$259Million 24%

Total$1,086Billion

OtherFunds$55Million DDOTBusfares,BSEEDconstrucSonfundrevenue

(shorjallsbackedbyGeneralFund)

What’shappeningtothoserevenues?

BudgetedSourcesofGeneralFundRevenue

IncomeTax $324Million Projectedtodrop13%

RevenueSharing$204Million Salestaxshareprojectedtodrop11%

CasinoTaxes$184Million 100%LossSinceMarch17

PropertyTaxes$115Million Expectedtodrop

Fees,OtherRev.$259Million Lostrevenuefromparking,courts,licenses

Total$1,086Billion

OtherFunds $55Million Busfaressuspended,construcSonacSvitystop

WiththeCasinosclosing,DetroitisgelnghitharderwithrevenuelossthannearlyanycityinAmerica

BudgetedSourcesofGeneralFundRevenue

IncomeTax $324Million Projectedtodrop13%

RevenueSharing$204Million Salestaxshareprojectedtodrop11%

CasinoTaxes$184Million 100%losssinceMarch17

PropertyTaxes$115Million Expectedtodrop

Fees,OtherRev.$259Million Lostrevenuefromparking,courts,licenses,permits,inspecSons

Total$1,086Billion

OtherFunds$55Million Busfaressuspended,construcSonacSvityshutdown

(shorjallsbackedbyGeneralFund)

WiththeCasinosclosing,DetroitisgelnghitharderwithrevenuelossthannearlyanycityinAmerica

FY2020

IncomeTax -$49Million

RevenueSharing-$7Million

CasinoTaxes-$52Million

PropertyTaxes -$1Million

Fees,Grants,Fares-$45Million

Total -$154Million

RevenueLossesImpacSngGeneralFund

FY2021

-$101Million

-$14Million

-$60Million

-$7Million

-$12Million

-$194Million

16MonthTotal

-$150Million

-$21Million

-$112Million

-$8Million

-$57Million

-$348Million

Thefollowingplanappliestoroughly8,000employeesundertheexecuSvebranch.

Doesnotapplyto:DetroitLandBankDetroitWaterandSewerDepartmentDetroitPublicLibrariesDetroitPublicLighSngAuthorityTheLegislaSveandIndependentbranchesandagencieswillalsohavetomaketheirowndecisions:CityCouncil DetroitAuditorGeneralCityClerk DetroitInspectorGeneral

HowDoWeEliminatea$348MillionRevenueShorjallin16Months?

CityGovernmentislargelypeopledeliveringservices.Outof$1billionbudget,morethan$650milliongoestosalariesandbenefitspaidtoour8,000employees.Ifwetook65%ofthedeficitfromemployees,itwouldequalmorethan20%pay/benefitscutorthelayoffofmorethan1,800fullSmeemployees

Duringbankruptcy,theCourt-approvedPlanofAdjustmentassumedCityincometaxrevenueswould

growby2%ayear

OursuccessbringingnewbusinessandpeoplebacktoDetroitfarexceededthatprojecSon.

WeexceededtheincometaxprojecSonsby$80millionlastyearalone.

Insteadofexpandinggovernment,weputmostofthegrowthinsavings:RainyDayFund,ReSreeProtecSonFund

NearlyalltheexpansioninservicesfromthesesurpluseswenttothePoliceDepartmentandBlightRemoval

Toeliminatethe$348millionshorjallin16months,ourplanisbasedon6principles:

1)  MaximizetheuseoftheRainyDayfundandothersavings2)  Police,Fire,EMS,andBusservicesshouldnotbecut3)  Temporaryandpart-Smeworkersshouldbereducedbefore

culngfull-Smecityemployees.4)  Thisvirusistemporary–weshouldtrytoreducehoursinstead

oflayingoff,sowedon’tloseouremployees’talentsforgood5)  PrioriSzemakingsureouremployeesandtheirfamiliesdon’t

losetheirhealthcare6)  Ifit’sachoicebetweenblightfundingandemployeesdelivering

cityservices,cityservicesmusttakepriority

Howdoweaddress$348millionhole?

SavedSurplusesfrom2016-2020 $101MillionAvailableRainyDayFund $50Million BlightFundsForFY20andFY21 $72MillionDelaycapitalprojectsFY20and21 $33MillionCFOCostCulngOrderofApril3 $6MillionNewFederalCARESFundsfortransit $36MillionTotal $298Million

Ourstrongfinancialmanagementwillletuscover80%ofourshorjallwithoutculngemployeeswagesorbenefits

Wehavetoreduceemployeewages/benefitsexpenseby$50million

•  Wewillhavetolayoff200part-Sme,temporaryandseasonalemployees.

•  Mostly20houraweekrecreaSondepartmentemployeeslikeplayleaders,lifeguards,lockerroomagendants.

•  SometemporaryadministraSvespecialservicesstaff•  CityHRwillbefilingyourunemploymentclaimsfor

youthisSaturday.

Reducingpart-Sme/temporaryemployeesfirst–$6million

Weneedtoreduceexpensesfromfull-Smecityemployeesby$44million

A:10%workersWork10%hours/get10%payandhealthcare Nopayincrease7/1

B:80%workersWork80%hours/get80%payandhealthcare Nopayincrease7/1

C:95%workersWork100%hours/get95%pay(over$125,000) Nopayincrease7/1

D:100%workersWork100%hours/get100%pay Nopayincrease7/1

The8,000full-Smecityemployeeswillfallinto4groups:

Here’swhateachgroupofsavingsgenerates:

SavingsThrough6/30/21A:10%workers900employees $17million

B:80%workers1,300employees $19million

C:95%workers100employees $1million

D:100%workers5,500employees $7million

TotalFull-TimeEmployeeSavings: $44million

900CategoryAWorkersDPDTrafficControlOfficers

DDOTTicketsalestellers

DPWDriversroadrepairsandotherservices

BSEEDPermits/Buildingsstaff

OfficeAssistants

Draw10%citypayeveryotherFriday

Keepyourcityhealthinsurance

GetstateunderemploymentinsuranceforthereducedSme

Get$600aweekfederalunemploymentthroughJuly31

Wehopetocallyoubackaseconomyrestarts

1,300CategoryBWorkersOfficeManagementAssistants

Accountants

InformaSonTechnologySpecialists

FinancialAnalysts

Draw80%citypayeveryotherFriday

Keepyourcityhealthinsurance

GetstateWorkSharebenefitsforthereducedSme

Get$600aweekfederalunemploymentthroughJuly31

Wehopetomoveyoubacktofull-Smeaseconomyrestarts

85CategoryCWorkers

ElectedOfficials,appointees,andexecuSveswhomakemorethan$125,000

Takingimmediate5%paycutunSlJuly1,2021

AskingthatyouconSnuetoworkfullSme

NopayraiseJuly1st

5,500CategoryDWorkers

PoliceOfficersFirefightersEMT’sDDOTDriversDDOTMechanicsOtherswhohavetocoverpublic-facingshics

Pay,benefits,workhoursremainsame.

ForthosewhohaveacontractualpayincreasedueJuly1st,weaskthatyouforegothatincrease.

Forthetemporary,part-SmeandCategoryAandBemployees,howwillstatepaymentswork?

OnSaturday,April18th,theCityHRDepartmentwillfileyourunemploymentclaimforyou.Youdonothavetofileanything.OnFriday,April24th,youwillreceiveyourlastfullcitypaycheck.That’stopayyouforyourworkApril6-19.YouwillreceiveaStateDebitCardinthemailshortly.You’llgetyourfirststatepaymentonMay8th.Yourcurrenthomeaddressmustbeonfile.

Ifyou’reinCategoryA(10%workers)

OnFriday,April24th,youwillreceiveyourlastfullcitypaycheck.That’stopayyouforyourworkApril6-19.OnMay8th,youwillreceiveyourcitypayfor10%ofyourSmefortheperiodApril20-May3.OnMay8th,yourstatedebitcardwillbecreditedwithunderemploymentpayfor90%ofyourSmeplus$600aweek.YouwillgetbothpaymentsonpaydayeveryotherFriday.

Ifyou’reinCategoryB(80%workers),worksthesamewayexceptthatyourcitycheckwillbelargerandyourstatepaymentwillbesmaller.

ForCityofDetroitResidents,wewillprotectPolice,Fire,EMS,andBusService,buttherewillbemanyothercutstoserviceforawhile

DelayedroadrepairsClosedrecreaSoncenters

CBPatrolswillremainsuspended

Blightisgoingtogetworseinneighborhoods

Manycityserviceswillonlybeavailableatkiosksoronline

Whatdoesthefuturelooklike?

Howdoesourcityandcountryrestart?It will have to happen in phases based on medical advice. The DPD restart may offer some guidance: 1)  Extensive testing of officers and staff 2)  Thermometer testing at start of each shift 3)  Masks to prevent spread of disease 4)  Intense cleaning protocols of stations and vehicles

Theeconomycannotrestartallatoncewithoutbeingrecklesswithourhealth

The restart will have to look something like this: Early phase: Landscaping, road/sewer repairs, construction Middle phase: Retail, office, manufacturing Later phase: Sit down restaurants, movie theaters, sports