Duggan delivers State of City Address

Posted at 8:44 AM, Feb 23, 2016
and last updated 2016-02-24 07:15:07-05

Touting balanced budgets, improved city services and a plan to deal with a pension fund deficit looming less than a decade away, Mayor Mike Duggan delivered one of Detroit's most optimistic State of the City addresses in recent years Tuesday.

Duggan's speech came amid a growing feeling of change in many parts of the city. Brick and mortar changes are easy to spot with new housing developments going up along the Detroit River east of downtown and the construction of a new professional hockey arena and entertainment district not far away.

The Public Lighting Authority has installed 61,000 lights over the past two years. City buses are running on schedule for the first time in nearly two decades and carrying more passengers than a year ago, Duggan told the crowd at Second Ebenezer Church.

He also said Detroit's notoriously poor police response times are nearing the eight-minute national average. It has been more than twice that.

But other improvements are more clearly shown on ledger sheets, as Duggan said Detroit ended the last fiscal year with a balanced budget for the first time since 2002.

"We're now four months from the end of this fiscal year — 2016," he said. "Our revenues are ahead of budget, our expenses are under budget and we're going to finish with a balanced budget for the second straight year.

"And this week we're going to send (the City) Council a budget for 2017 and it will be balanced for the third straight year. We're finally bringing financial discipline to this community."

Detroit exited the nation's largest municipal bankruptcy in December 2014. The city's restructuring plan removed $7 billion in debt while setting aside more than $1 billion in savings and revenue to improve city services.

But Duggan said state-appointed emergency manager Kevyn Orr — who led Detroit into bankruptcy and out of it — and his team of consultants may have miscalculated how long Detroit retirees would live, possibly leaving the city with a $491 million deficit in its pension fund that starts to come due in 2024.

"It's hard to believe and I hope this turns out not to be true, but it does appear that way," Duggan said of Orr and his team. "They used outdated mortality tables. They assumed people were not going to live as long as they were to make the numbers look more favorable."

Still, the mayor said the situation is manageable because Detroit's financial posture is better. The city is able to put an additional $10 million in its 2016 budget and another $10 million in the 2017 budget, Duggan said.

"It's not a crisis today. It's a problem today," he said. "You start to deal with it early. You deal with it honestly and we can manage it."

Duggan has been mayor since the start of 2014.