March 10 (Reuters) - The Detroit City Council on Friday approved the mayor’s proposed fiscal 2018 budget and the creation of a special fund to help cover future pension payments.
John Hill, the city’s chief financial officer, said the $1.074 billion general fund spending plan for the fiscal year that begins July 1 would mark Detroit’s fourth balanced budget since exiting bankruptcy in late 2014.
Mayor Mike Duggan’s budget also included a plan to help Detroit cope with looming pension payments.
“The entire Detroit council is to be applauded for working cooperatively together and with the mayor’s office to provide a fiscally sound future for the city while continuing to meet our obligation to provide services to our citizens,” Hill said in a statement.
Duggan’s pension plan would create a special trust fund totalling $377 million by the end of fiscal 2023 to help the city cover higher-than-expected pension payments starting in fiscal 2024.
Detroit’s court-approved bankruptcy exit plan had projected city pension payments to spike to $111 million beginning in fiscal 2024 after years of minimal or no payments by the city. But a subsequent actuarial analysis pegged the payment spike at $200 million or more.
After shedding about $7 billion of its $18 billion of debt and obligations when it exited the biggest-ever municipal bankruptcy in December 2014, Detroit’s finances have been subject to a state oversight commission.
A vote by the commission on the latest budget plan is scheduled for next month.
Duggan has said Detroit’s goal is to end state oversight in 2018 if the city has three-straight years of balanced budgets and meets other conditions. (Reporting by Karen Pierog; Editing by Andrew Hay)