How Your Budget Works

Quick Links: 

• How the City of Detroit Budget is Prepared
• Annual Budget Process Timeline
• How the City of Detroit Budget is Organized

How the City of Detroit budget is prepared

The MAYOR oversees preparation of the annual budget, covering administrative departments, service delivery operations and policy priorities

• He is the Chief Executive Officer with responsibility for all Executive Branch agencies
• He is granted broad powers by The City Charter, including appointment of department directors and deputy directors, and responsibility to implement most programs, services, and activities
• He proposes an annual budget and four-year financial plan to the City Council each March, and proposes a Five-Year Capital Agenda every other November.

CITY COUNCIL approves the city budget, either by adopting the Mayor’s submission or by approving amendments to it.

• The legislative body of the City may enact ordinances and approve resolutions. The body can override the Mayor's budget veto by two-thirds vote.
• They engage constituents around a broad discussion of public priorities
• Nine members serve four-year terms, two elected “at-large” across the city and seven from geographic districts

The OFFICE OF THE CHIEF FINANCIAL OFFICER (OCFO) is the centralized financial management organization for the city of Detroit, setting strategies and overseeing administration of financial functions.

• The OCFO guides agencies each year through an assessment of their service delivery needs, and monitors compliance with adopted budgets.
• The OCFO sets strategies and oversees long-term planning, reform and continuous process improvement
• The OCFO oversees tax statements, bond sales, and revenue collection

REVENUE ESTIMATING CONFERENCE establishes the official economic outlook, or “forecast,” and the forecast of anticipated City revenues. The biannual conferences (September and February) set revenues for the City’s annual budget.

• Voting principals are from the State of Michigan Department of Treasury, a public institution of higher education, and the City of Detroit’s Chief Financial Officer
• Required by State law (Michigan PA 279 of 1909, amended by PA 182 of 2014), annual revenue amounts are set from an economic forecast prior to setting annual expenditures. The Conference meets in September and February

STATE OF MICHIGAN FINANCIAL REVIEW COMMISSION (FRC) was created to monitor City compliance with the Plan of Adjustment, confirmed by the Bankruptcy Court, November 12, 2014. The FRC provides oversight of City financial activities, for at least 13 years, depending on the City meeting certain criteria such as balanced budgets.

PUBLIC  PARTICIPATION IS KEY
Detroit residents and other stakeholders are invited to learn about city government year-round and to participate in the budget through the Annual Public Budget Meeting, “YOUR BUDGET” Priorities Comment, City Council District Budget Priorities Forums and our report archive. 

ANNUAL BUDGET PROCESS TIMELINE
OCFO Controller’s office
Accountants track expenses by agency and operation throughout each fiscal year. At the end of every fiscal year, the City closes its books and they are independently audited. They produce the Annual Comprehensive Financial Report by calendar year-end.

OTHER CITY OF DETROIT RESOURCES PLANNED BY THE BUDGET OFFICE

• Capital projects, which invest in long-lived assets such as police precincts, roads or fire trucks, are brought to City Council for approval. The approval includes the source of the funds as well as how they will be used. Capital projects are guided by long-term capital plans, in the Five-Year Biennial Capital Agenda prepared for every city department and city-owned asset, every other even-numbered year.
• The budget documents may include grant appropriations if the grant is awarded to the City before the recommended budget is prepared. Grants and other gifts are secured by the OCFO-Office of Development and Grants at any time, and awards are brought to City Council for approval. The Budget Office always prepares budget amendments to present to the City Council for approval before the awards can be spent.
• Capital projects are often funded by Bonds if a majority of the citizens of Detroit have voted to approve bond authorization ballot questions. The Budget Office projects the amounts needed, prepares reports to support bond sales, and schedules the expenditures as well as the repayment.

Annual budget process timeline

1. October Annual Public Budget Meeting
   Information about the major programs and services funded in the budget
2. Jan-Feb Public Input 
   District Budget Priorities Forums presentation
3. March-April Proposed Budget and City Council Hearings
   Mayor’s Budget transmitted to the City Council on or before March 7th
   City Council Hearings, by date of hearing

How the City of Detroit budget is organized

The City of Detroit budget is approved each April for the period July 1 to June 30. The “Operating Budget” covers recurring day-to-day activities, such as staff and supplies, “Capital” covers long-lived assets such as building improvements and equipment purchases, and “Grants” include what we are accepting from State and Federal governments and other 3rd parties, largely for specific projects.

Appropriations are the central part of the City Budget. City Council approves an amount for each appropriation, to cover the 12-month fiscal year, and must approve changes to that amount. The Legal Budget is a list of those authorized amounts.

• Appropriation codes are assigned to both expenditures and revenues
• Departmental appropriations are managed by Department Directors.
• Non-departmental appropriations include debt, pensions and are not generally assignable to a specific department.
• Capital appropriations are found in the departments that administer them.

The Adopted Budget is the sum of the appropriation amounts approved by City Council, and is found in the Four-Year Financial Plan. Forecast years show expected future amounts, given currently known conditions and plans. Recommended amounts are what the Mayor has brought to the City Council. Actual amounts are what was recorded in prior fiscal years.
The Adopted Budget is organized in different ways, for accounting purposes:

1. FUNDS – groupings of activities determined by the limits of the source of the money
2. DEPARTMENTS AND COST CENTERS – organizational units for administering programs and services
3. OBJECT CODES – categories or types, either “Personnel” objects which relate to employee wages and benefits, or “Non-personnel” objects such as types of revenues, contractual services, materials, utilities and overhead costs.
4. PROJECTS – time limited and scope-limited

Each appropriation belongs to a Fund, under a Department, and is classified into one or more cost centers and one or more object codes. An appropriation may or may not include a Project.
Example of an account string:

General Fund – “Vibrant & Beautiful City-GSD” Appropriation – “Park Development” Cost Center – “Contractual Services” Object Code.
(This resource has no Project Code.)

The financial data tables identify the major groups and expenditure account codes for the city (in Section A) and for agencies (in Section B). Detail is by Object Code, by Fund, by Cost Center and by Positions.

Departmental Operating Budgets, in Section B of the Four-Year Financial Plan, include the programs and services funded, and broad city outcomes served. These sections describe agency Mission, or purpose; their organization; and their strategic service priorities.

• A “Program” is a group of resources directed at specific results. A program can consist of services to the public such as police patrol or tree maintenance, or internal activities such as office administration or accounting. Appropriations, the basic unit of the budget, tend to represent programs.
• A “Service” is what the public sees. It is the product of City activities. The city will better measure its spending on specific services and its performance of each in future budgets.
• An “Outcome” is the result or impact that Services have. The City’s focus is on Safer Neighborhoods, a Vibrant and Beautiful Detroit, Economic Equity and Opportunity, Efficient and Innovative Operations, and Effective Governance. The Budget will better measure results in these areas.
• Performance Measures demonstrate progress toward the outcomes. Performance measures may gauge workload, effectiveness, efficiency, or productivity.