Proposed Detroit budget cuts could cost the struggling area local economy $100 million in lost consumer spending this year.
Detroit mayor Dave Bing on Monday proposed a budget that will slash city spending by $250 million, eliminate nearly a quarter of the city’s work force, and reduce employee pay by 10%.
Detroit is trying to avert a financial catastrophe, facing a $50 million shortfall by May. Any new fiscal plan will be the first under a consent deal with the state to overhaul Detroit’s finances.
Considering the city’s 11,000 member workforce, the budget cuts could remove more than 2,500 positions from the payroll. By itself, the lost personal income could amount to $125 million, if the average employee makes $50,000 per year.
Job loss for 2,500 workers will raise the city’s unemployment rate, which already stands at above 10%. If jobless workers cannot pay mortgages, more homes going into foreclosure will add to the already record foreclosures in the city and state. Further, the lost jobs could well lead to increases in the swelled state Medicaid rolls.
Cultural institutions run by the city of Detroit, such as the zoo and museums, will take a 12 percent hit in funding under the proposed 2012-13 budget, with the exception of the Detroit Institute of Arts, which will lose its entire city funding.
The city’s fire department, already understaffed to fight the nation’s largest inner city epidemic of arson, will take a hit. Reacting to the proposed budget reductions, a city fire commissioner proposed a policy whereby some vacant buildings be allowed to burn, noting that some 40 to 60 percent of fires in Detroit are in vacant structures.
Public transit, at present on the brink of collapse, may be pushed to the edge by the new round of cuts. Detroit bus riders, most with no other mode of transportation, are already suffering the impact of recent cuts including the elimination of bus routes, the end of 24-hour service and a reduction of weekend service.
Detroit’s had it coming for years, thanks to reckless financial mis-management and well-documented public corruption. No longer can they spend money they don’t have. While the budget is a work in progress, it foreshadows tough and gloomy days ahead for the city and its surrounding suburbs.