Detroit's credit rating rebounds, mayor Mike Duggan celebrates fiscal success after a decade
(CBS DETROIT) – It's a financial comeback a decade in the making; Detroit's credit rating is now back to what it was before the city went broke and couldn't pay its bills.
To celebrate the milestone, Mayor Mike Duggan handed out bottles of black ink on Monday to members of his administration as a gift because long gone are the days of swimming in red ink.
Over the last 10 years, the city of Detroit has consistently kept a balanced budget and been smart with its money, so they're getting rewarded with not just one but two bumps in its credit rating with Moody's from Ba1 to Baa2.
"When the emergency manager left in 2014, there were a lot of dire predictions. 'Detroiters can't be trusted with self-determination, can't run their own finances. What's going to happen now?'" Duggan said. "What we've done since is 10 credit rating upgrades in less than a decade. It has been nothing but a remarkable run."
What's behind it?
The mayor says that when Detroiters approved "Proposal N," it helped get rid of blighted houses that were bogging down property values. Unemployment has plunged from 20% to 8%, and income tax revenues are exceeding everyone's expectations.
"What Ford is doing at the train station, what General Motors has done at Factory Zero and the part suppliers, what Amazon has done, what Dan Gilbert, Chris Ilitch, and Gary Torgow have done in improving office buildings and housing and moving people in, and what city council in having the courage to approve every one of those projects—all of those things together made this possible," Duggan said.
While other cities were using federal money from the American Rescue Plan to balance their budgets, Detroit didn't need to, allocating the funds to address needs in the community.
Here's what a higher credit rating means:
"Your taxes are going to be lower on the debt that we've issued, as well as the debt we will issue in the future," Jay Rising, Chief Financial Officer for the city of Detroit, said. "So it's easier to go to market and get things voter approval or bond sales, which will cost you less money."
"I think the next step is just to ensure that we remain fiscally responsible," said Detroit City Councilmember Fred Durhal III when asked what steps the city will take to continue the upward trajectory. "There are going to be some tough decisions that need to be made. We have met our obligation to our retirees for our first pension payment of $150 million. But it means, just stay the course."
