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Detroit committee receives seven‑month financial report; officials warn of income‑tax shortfall
Summary
Deputy CFO Donnie Johnson told the Budget, Finance & Audit committee that Detroit projects a narrow $2.2 million operating surplus for the year but faces an annualized $56.9 million shortfall in income‑tax revenue; Acting Treasurer Valerie Golley highlighted a $1.68 billion January cash balance and a temporary accounts‑payable backlog.
Donnie Johnson, deputy chief financial officer and budget director for the city, told the Budget, Finance & Audit standing committee on March 25 that the city currently projects a narrow operating surplus for fiscal year 2026 but faces significant risks from lower income‑tax receipts.
“We are continuing to run behind on income taxes,” Johnson said while presenting the seven‑month financial report for the period ending Jan. 31, 2026. He said the city recorded a $23.9 million year‑to‑date revenue surplus and an underspend of about $10.7 million in expenditures, leaving a projected operating surplus of $2.2 million for the year after annualization.
Acting Treasurer Valerie Golley said income‑tax withholding is up about $10 million compared with the same time last year, while corporate and partnership collections lag. “The estimate that we had for income taxes for fiscal year 26 is $413,000,000,” Golley said. She cautioned that corporate filings and refunds can shift timing and that revenue estimates will continue to change as taxes are filed.
Johnson and Golley flagged a larger structural issue: when annualized, the OCFO projects a $56.9 million shortfall in income‑tax revenue and a $7.1 million shortfall in state revenue sharing, leaving a projected revenue shortfall of $13.8 million for the current fiscal year before timing adjustments. Johnson told the committee the administration is conservatively maintaining a $42 million income‑tax reserve but hopes not to tap it.
On expenditures and staffing, Johnson said the city saw a net increase of 19 full‑time equivalent positions year‑to‑date, with recruitment gains in the police department and Detroit Department of Transportation bus operator hiring. He said underspends in salaries and timing of contractual services explain much of the current expenditure underspend.
Committee members asked whether departments would be instructed to freeze hiring. “At this time, I don't see that as being something that would happen or be necessary,” Johnson replied, adding that the city expects to close the year in a reasonable operating position.
The committee moved to receive and file the OCFO report; the motion carried with no objections.
