Detroit sees third year in a row of balanced budgets

Could end state oversight in spring

City records general fund operating surplus of $53.8 million

The city of Detroit has balanced its budget for the third year in a row and could soon be free from state oversight.

The Detroit Financial Review Commission has been monitoring the city's post-bankruptcy finances, approving budgets, budget changes and larger contracts, for around three years.

But after delivering three balanced annual budgets (and operating surpluses), Detroit is through the "first gate" on the path to exiting state oversight, said John Hill, the city's chief financial officer.

After a few additional requirements — mostly administrative — are met, the state commission could vote to waive its oversight authority around March or April, Hill said.

Even if the commission approves the city's exit, however, it would stick around "in the background" for 10 years and could resume oversight in the event the city's finances worsen, Hill said.

The city tracked its third year with an operating surplus, as well, according to a summary of its comprehensive annual financial report. The surplus for fiscal 2017 ending June 30 was $53.8 million, a decrease from fiscal 2016's nearly $63 million surplus. The projection for 2017 had been $51 million.

The biggest reason for that was likely that the city had fewer job vacancies this past year than in 2016, Hill said. Many of the new hires were in public safety.

Detroit also finished its financial report for fiscal 2017 four months earlier than it did last year. It reported a general fund unassigned fund balance of $169 million, up $26 million from fiscal 2016, according to the summary.

"(Detroit) has really not just dealt with current financial issues, but is looking several years out to make sure that any future financial problems we have are taken care of," Hill said. "So that's a really big change (from) the way the city had operated before."

The city launched into a turnaround after it emerged from a 17-month bankruptcy case in December 2014. It was the largest municipal filing in U.S. history.

"Balancing our third consecutive budget shows that this administration, in close partnership with City Council, is able to effectively manage the city's finances," Mayor Mike Duggan said in a statement. "This is another big step forward and helps set the stage for the end of active state financial oversight."