Detroit projected to finish Fiscal Year 2024-2025 with $60M budget surplus, Mayor proposes using savings to create a new reserve fund for Fiscal Year 2025-2026

• Surplus is City's 11th consecutive since emerging from bankruptcy and is one of several sources of financial reserves
• Mayor proposes amendment to current budget and create new $42 million Corporate Income Tax Reserve Fund, which will cover potential revenue losses from manufacturing slowdown, federal tax law changes
• New fund is in addition to $502 million currently set aside in Detroit Rainy Day and reserve funds
  

The City of Detroit concluded the 2024-2025 fiscal year on June 30 and is now projected to have a $60.2 million surplus Detroit Chief Financial Officer Tanya Stoudemire announced today. The fiscal year closed June 30, 2025 and the results mark the 11th consecutive year the City has ended a fiscal year with a surplus.

Mayor Mike Duggan credited the strong management of city department heads. The surplus was generated by cost reductions and when nearly every city department came in under budget. "We knew we are heading into uncertain times and we asked each department head to watch every dollar this year," Duggan said. Their diligence generated a $60 million surplus even in a year when revenues were flat. I'm enormously grateful to them."

In June, the national rating agency Moody's gave the City of Detroit its 11th credit rating upgrade during Mayor Duggan's administration. As Moody's reported: "Detroit continues to bolster its financial resiliency and maintain solid operating performance, which will enable it to successfully weather the adverse effects of an economic slowdown, should one occur." "It has been the Mayor and City Council working together that has generated these budget surpluses year after year, and today we are able to tell Detroiters that we are leaving the next council and administration in as strong a financial position as ever," said Mayor Duggan.

The Mayor also gave credit to Detroit City Council for its financial leadership. "Every single year, City Council has adopted the budget on time and without public drama," Duggan said. City Council's leadership is a huge reason the city now has an unprecedented $502 million in financial reserves for the next administration:

• $150 million Rainy Day Fund
• $281 million Retiree Protection
• $71 million Risk Management Liability Reserve Fund
• $502 million total reserves

"As Chair of the Budget and Finance committee, it is always our mission to make sure the city is making responsible decisions, and making sure the city is prepared for uncertain times" said Councilman Fred Durhall, III. "The $60 million surplus is a great result, and I congratulate everyone who worked to make it possible.

Challenges Ahead: Mayor proposes creating $42M Corporate Income Tax Reserve Fund for Fiscal Year 2025-2026.

CFO Stoudemire said that the $60M surplus is a conservative estimate and the final number is likely to increase before the audit of the 2024-25 fiscal year budget is completed at the end of the year. But when Stoudemire began to see warning signs on decreasing corporate income tax revenues for the current fiscal year, she recommended to the Mayor the city act quickly to prevent any financial difficulty in 2025-2026.

"After City Council adopted the 2025-2026 budget April 7, Congress passed the "Big Beautiful Bill" with provisions allowing corporations to accelerate "bonus depreciation" cutting their federal tax payments," Stoudemire explained. "Our attorneys are telling us it's legally unclear whether the cuts apply to the City Corporate Income Tax, but if they do, it could be a $16 million loss to our budget this year."

"In addition, in the last 5 months we've seen a major reduction in corporate income tax from Detroit manufacturers, reflecting a steep drop in manufacturer's profits," Stoudemire continued. "We hope the tariff uncertainty driving these drops are resolved quickly at the national level. If they are not, Detroit could be looking at a potential loss of $26 million by the end of the year."

Stoudemire indicated the rest of city tax revenues are continuing to come in on target but advised the Mayor of a potential loss of $42 million in corporate income tax revenues in Fiscal Year 2025-2026.

Mayor Duggan is transmitting today a request to City Council to take $42 million of last year's surplus and immediately create a new Corporate Income Tax Reserve Fund. "I want to be sure even in these highly uncertain times that the next administration will not have to deal with a budget shortfall," Duggan said.

The new $42 million Corporate Income Tax Reserve Fund is on top of the $502 million in reserves in the current budget. "Facing new financial challenges quickly and honestly is the reason Detroit achieved 11 straight credit rating upgrades and why Moody's is favorable on a 12th rating upgrade next year," Duggan said. "I hope economic conditions turn around quickly and the full size of this reserve won't be necessary."

"But in this highly uncertain economic environment, I want to make sure my successor starts off with a budget surplus, not a deficit. Establishing this new Corporate Income Tax Reserve Fund at the first sign of problems early in the year is the best way to protect our city services."