The Impact of Federal Stimulus Relief on Detroit’s Budget

March 15, 2021

This year were shining a light on city budgeting...

Federal Stimulus Relief and the Detroit Budget

Michigan is scheduled to receive $10.3 billion in federal stimulus money to help with the impacts of the covid-19 pandemic. About $880 million of that will go to Detroit.

This package of local aid is much higher than the $117 million distributed through the CARES Act last year[1]. Also, unlike the CARES money, which had many spending restrictions, this $880 million is designated to fill tax revenue shortfalls and can be spent with much more freedom[2].

With more flexibility and nearly 8x more than the amount of stimulus it received for the current budget, how will Detroit address the funding gaps recently identified in the administration’s 2021-22 proposed budget. These existing funding gaps will definitely impact the funding and delivery of much needed public services to Detroiters.

Where might the money go?

Bringing back city workers  In total, since the start of the pandemic, Detroit has lost about $502 million in expected revenue dollars[3]. In response, the City has laid-off many city employees, slashed department’s staff, reduced city employee pay, and scheduled pay raises.  With this round of stimulus, will the City bring back all employees and restore department staff to 100%, along with intended pay increases?

Funding the police
Increasing police spending is nothing new in Detroit. Even amid an economic crisis the city has managed to pour millions more into the police department. The administration has expressed the desire to hire many more officers.  Are Detroiters likely to see even more increase in the police budget in 2021-22.

More money for home repair
The proposed 2021-22 budget makes significant cuts to home repair programs. The $665k figure for the Senior Home Repair program in the 2021-22 budget is half of what it was pre-Covid and Conventional Home Repairs is down $1.5 million from what was adopted last year. As one of the most popular city programs, can Detroiters expect to see an increase in funding for home repairs.

Where should the money go?

Transit In addition to the usual federal grants, Detroit will be able to allocate stimulus money to transportation. The City has decided to resume DDOT bus fare collection for this year.  Stimulus funding could be used to cancel bus fares.

Like transit, Detroit can add stimulus money with federal grants to bolster affordable housing. Funds for affordable housing will decline in next year’s budget and has been underfunded for years. Considering the current housing crisis impacting Detroiters majority renter population and poverty levels in the City, increased funding from the stimulus funding could be allocated to expand affordable housing opportunities for Detroiters.

City parks are deteriorating outside of a few neighborhoods targeted for development. The stimulus money could be used to expand park improvement efforts across the city.

Although the library has its own milage and its own money, the City can still help fund library services and operation. Just like city parks, city Stimulus money should be used for a massive capital improvement project for libraries throughout the city.

  3. Last year’s revenue loss totaled $146 million. This budget year has a shortfall of $253 million and the next budget year of 2022 has a predicted loss of $103 million. See 03/FY22-25FourYearFinancialPlanSectionA Overview.pdf