Dearborn Heights officials flag $1.7 million shortfall; council seeks itemized fund‑balance report

Council leaders and department directors at a Dearborn Heights study session discussed a request from the administration for roughly $1.7 million in budget amendments to cover overtime, preapproved purchases and other shortfalls, and pressed staff for an itemized accounting of how prior spending drew on the city's fund balance.

"We're in a very, very bad position," the council chair said near the start of the meeting, characterizing the shortfall and urging directors to explain why their departments exceeded budgeted amounts.

The city controller reported that the revenue the council approved for the most recent budget had been projected at $54,515,776 but actual receipts to date were $49,532,763, leaving about a $5 million shortfall versus the adopted projection. The controller said the current request before council amounts to roughly $1.7 million, which combined with the revenue shortfall equates to about $6.7 million of pressure on the fund balance.

Council members and staff identified three primary drivers: higher overtime across public safety and public works, retroactive and negotiated union pay increases and several preapproved purchases or contracts that were not previously shown to come from fund balance.

Police and fire overtime: staff and the chiefs described persistent understaffing that has driven overtime costs. The police department's overtime budget was described in the packet as about $874,000; with the amendment requested by staff the department would seek roughly $400,000 additional for a total overtime projection of about $1.2 million for the fiscal year. The fire chief said the department is asking for about $300,000 in additional overtime and described an improving hiring pipeline that should reduce overtime once new hires complete training.

"If we can keep the staffing on the trucks, that's extremely important to me for the safety of the citizens," Fire Chief Brogan said, urging the council to weigh short‑term overtime against the public‑safety risks of pulling engines or crews out of service.

DPW and other departments: the highway/highway/DPW administration reported an amendment request of roughly $155,000 for overtime and related operational needs; building maintenance and other DPW units were also called out as running over their current line‑item budgets. DPW Director John Dancy urged caution about cutting operations that keep water, streets and emergency repairs functioning.

Contracts and retroactive pay: council members and staff discussed recent union settlement payments and retroactive pay; staff said those payouts and negotiated increases contributed materially to the drop in unrestricted fund balance from prior years. Council members asked whether cost analyses were prepared before entering the most recent tentative police and other union agreements; staff said the controller was reviewing the contract language and dollar impacts and that those figures will be presented when the tentative agreement comes before council.

Restricted funds, water and Wayne County invoices: staff said some liabilities (in particular a multi‑year CSO operating agreement with Wayne County) sit in restricted water‑fund accounts. The chief of staff reported a restricted balance of about $2.8 million and said Wayne County has submitted invoices that currently appear to total roughly $3.9 million; staff said they are reconciling the invoices with the city's records.

Prior approvals and fund balance transparency: several council members said they had not been aware that earlier motions and purchases were being charged to fund balance. Council members asked the clerk and finance staff to produce, for the next agenda, a list of motions and purchases since the June budget close that have been charged to fund balance or that will require a budget amendment. The council chair directed that any future purchase requests that will use fund balance be labeled as such in the motion packet.

No formal vote on the new $1.7 million amendment was held at the study session; council members said they were unlikely to approve the full request without a department‑by‑department review and further detail on which items are already committed versus forecasted.

The session included other line‑item requests that staff said originated as preapproved motions in the previous fiscal year and now require technical budget amendments to process payment, including: - A previously approved parks payment for the Wendell Park playscape (motion 24‑3‑26, $17,753.40) and a related engineering item (~$5,200). - A Central Park marquee sign (motion 24‑3‑45, $138,000) where Wayne County millage proceeds would cover $44,624 of the cost; the balance was described as coming from city sources. - Multiple smaller items tied to vehicle outfitting, telecom (a Windstream bill the director said ballooned before staff switched to a SIP trunk solution) and reimbursements tied to grants.

Directives and next steps: the council asked staff to prepare and deliver to all council members: (1) an itemized list of every council‑approved motion or purchase since the budget was adopted that was charged to fund balance; (2) the controller's detailed calculation of revenues realized versus budgeted, including unrestricted fund‑balance figures for fiscal years 2022'2024 and year‑to‑date for 2025; and (3) a department‑by‑department breakdown of overtime and the line items that are forecast to require amendment.

Council members said they will consider smaller, targeted relief requests (members suggested splitting or cutting some amounts and examining overtime reductions) but that they will not approve the full $1.7 million request as presented without the additional documentation and an opportunity to rescind or delay expenditures that have not yet been committed.