City finance officials present four-month report, flag $61.1 million municipal income-tax shortfall

Donnie Johnson, acting deputy chief financial officer and budget director, and Valerie Agoli, acting treasurer and deputy CFO, presented the Office of the Chief Financial Officer's four-month financial report (through Oct. 31, 2025) to the City Council's Budget, Finance and Audit Committee and said the city's Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2025, has been completed and published.

Johnson said the Oct. 31 snapshot showed year-to-date revenues running "about $20,500,000 ahead" and, after accounting for expenses, a running general-fund surplus of approximately $20,400,000 at the four-month mark. He cautioned those figures are an early snapshot and that timing of remittances and invoice timing can create month-to-month variance.

Agoli, who walked the committee through revenue categories, said withholding collections are up about $7.5 million year over year while corporate collections were down roughly $4.7 million; net collections through October were roughly $1.3 million higher than at the same point last year. "Withholding is up by 7,500,000," she said. The OCFO reported the city's cash balance was approximately $1.7 billion as of October 2025.

Despite the early-year surplus, the OCFO said an annualized projection shows a projected municipal income-tax shortfall of roughly $61,100,000 for fiscal year 2026 compared with the February 2025 estimate. Agoli and Johnson attributed the change mainly to federal tax-law changes that affect corporate taxable income and to adjustments in earlier growth assumptions. "We projected a shortfall in income tax revenues of $61,100,000," Agoli said, adding the February revenue estimating conference will refine the projection.

Johnson flagged wagering and online gaming as a source of upside: wagering taxes were about $15 million ahead of expectations as of the report. He noted the city had prudently set aside a corporate income revenue reserve of $42 million that is available to smooth shocks; he described the reserve as "doing exactly what it was intended to do." The OCFO's amended-budget reconciliation also showed about $27.8 million in continuing appropriations carried forward from FY25.

On expenditures, Johnson said a $3.5 million negative variance in operating supplies reflected timing, not structural overspending. He also described vacancy savings and workforce churn as normal; the city reported net FTEs rose slightly (10,422 to 10,425) month over month, with police and fire reductions largely due to retirements and public-works hiring to fill engineers and road-crew positions.

Agoli reviewed accounts-payable metrics: total AP at month end was about $42 million; AP not on validation hold was roughly $25 million; after retainage, net AP on hold was about $20.5 million. She described common reasons for invoices to be on hold (pending receipt, purchase-order mismatches, retainage) and noted Treasury's preference to move payments to ACH rather than checks.

Committee members asked for follow-up details. Council Member Leticia Johnson asked where the quarterly reports are posted; Donnie Johnson said reports are posted on the City of Detroit website under the Office of the Chief Financial Officer (detroitmi.gov/ocfo or detroitmi.gov/budget). Members also asked which ARPA-funded positions will need permanent funding; Johnson said most ARPA-funded programs should be wrapped up and reconciled by June 30 to allow federal closeout and that the city will present specifics.

After questions, the committee moved to receive and file the financial report. A motion to receive and file the report for the four months ending Oct. 31, 2025, passed without objection.

Next steps: the OCFO said it will refine projections at the February revenue estimating conference, provide requested breakdowns (ARPA-funded positions and AP-on-hold detail), and return with documentation about continuing appropriations as requested by members.