DETROIT – The budget submitted by Mayor Dave Bing and passed by the City Council may undergo even deeper cuts because of police and fire pension obligations were undershot.
Bing's original budget called for about $100 million in cuts to reduce the $300 million deficit, but the City Council deepened his cuts by $32 million.
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Bing had said some police and firefighters will be laid off, and it's likely some recreation centers and parks will close. The cuts also will affect vehicle maintenance and grass cutting.
The mayor's biggest concern was over the $6.7 million cut from the Police Department and $3 million cut from the Fire Department.
Now, together, they may have to find a way to cut another $20 million because of the reconfigured pension costs.
The budget had assumed the cost for the pension fund would be $60 million but after the council's fiscal analyst looked over the numbers, it was determined that the actual cost would be $81 million, which means nearly $21 million in extra costs.
Each year the city's pension payments are determined by a financial analyst, who wasn't available when the budget was passed by council 7 to 2 last week.
That report concludes that the pension funds return on investments' is too low, so payments to the fund must go higher.
Under the new formula, for every dollar given to a police or firefighter in salary, another 35 cents must be spent on their pensions
Deputy Mayor Saul Green said the new plan is not sustainable.
"We're willing to work with council to come together and develop ways to change the pension system that will allow the system to be protected but also allow us to make contributions that we are able to make," said Green.
Councilwoman Saunteel Jenkins said the budget could get even worse because the general pension fund has not yet been worked out, which could mean another unexpected $20 million cut.
The new budget goes into effect July 1, but through out the coming budget year, the council will have to make budget amendments.