Detroit City Wire

• City of Detroit Reports Revised Revenue Estimates for Fiscal Years 2023-2027

   

  • City’s revenue outlook continues to improve, thanks to strength of income tax and continuing efforts driving economic opportunity and growth for Detroiters
  • Economic effects from the pandemic and future gaming behavior remain risks to the revenue forecast
  • Additional development projects throughout Detroit could bolster more robust levels of revenue growth.

DETROIT - On September 12, the City of Detroit held its regular biannual Revenue Estimating Conference to receive an update to the Detroit Economic Outlook for 2021-2027 and approve revised economic and revenue forecasts for the remainder of fiscal year 2023 and for fiscal year 2024 through fiscal year 2027. State law requires the City to hold independent revenue conferences in September and February each fiscal year to set the total amount available to be budgeted for the next four years.

The Detroit Economic Outlook for 2021-2027, which was previously released in August, shows the City’s economy holding up in the face of national economic headwinds, as development projects in Detroit and pent-up demand in the auto industry prove to be major drivers in the City’s ongoing economic recovery. The forecast is prepared by the City of Detroit University Economic Analysis Partnership, which is a collaboration of economic researchers between the City, Wayne State University, Michigan State University, and the Research Seminar in Quantitative Economics (RSQE) at the University of Michigan.

Revenue Outlook Continues to Improve

The City’s revenue outlook continues to improve, thanks to the strength of our income tax and our continuing efforts driving economic opportunity and growth for Detroiters. The Revenue Conference has once again approved higher revenue estimates based on our stronger collections concluding the previous fiscal year, Detroit's continued economic growth and stability, and revenue sharing increases provided in the State Budget enacted in July. Income taxes continue to drive revenue growth in future years as well, in line with the City’s economic forecast and despite an ongoing loss from nonresidents expected to continue working remotely through hybrid work models. Economic effects from the pandemic and future gaming behavior remain risks to the revenue forecast. However, the City’s efforts to attract major employers and provide Detroiters with opportunities for good-paying jobs provide potential revenue upside to the forecast. Additional increases in revenue sharing from the State of Michigan could provide potential upside as well.

“The improved revenue outlook is further indication that the City’s efforts to spur economic growth-by attracting new businesses, creating opportunities for Detroiters, improving public safety and beautifying neighborhoods are working despite the pandemic and its lingering consequences,” said, Jay Rising, Chief Financial Officer, City of Detroit.

Revenue Estimating Conference Results

The Revenue Conference reported FY2023 General Fund recurring revenues projected at $1.187 billion for the current fiscal year ending June 30, up $41 million (3.6%) from the previous conference estimate in February 2022. The increase is driven by our growing income and property tax base and revenue sharing increases provided by the State of Michigan. Internet gaming continues to provide additional revenue stability in the face of weaker on-site gaming activity.

General Fund recurring revenues for FY2024, which begins July 1, are now forecasted at $1.214 billion, an increase of $27 million (2.3%) over the revised FY2023 estimates. The projected increase is driven by income taxes, as the local economy continues to recover and grow. The conservative General Fund revenue forecasts for FY2025 through FY2027 show continued, but more modest, revenue growth of less than 2% per year. Additional development projects throughout Detroit could bolster more robust levels of revenue growth.

The City will use the estimates approved today to begin developing the City’s FY2024 Budget and FY2024 through FY2027 Four-Year Financial Plan. The conference will meet again to approve revised revenue estimates in February 2023. The voting conference principals are Jay B. Rising, the City’s Chief Financial Officer; Eric Bussis, Chief Economist, Director, Office of Revenue and Tax Analysis, Michigan Department of Treasury; and George A. Fulton, PhD, Director Emeritus, Research Professor Emeritus, Research Seminar in Quantitative Economics (RSQE), Department of Economics, University of Michigan.

· September 2022 Revenue Conference – Detroit Economic Outlook Slides

· September 2022 Revenue Conference – Revenue Estimates Slides

· Link to Zoom recording of September 2022 Revenue Conference 

To review past Revenue Estimating Conference Reports visit Financial Reports under Revenue Estimating Conference Reports section.

Original source can be found here.