Kevin Bain,
Director of Strategy
On September 9, the City of Detroit held its regular biannual Revenue Estimating Conference to receive an update on the Detroit economic outlook and to approve revised economic and revenue forecasts for the remainder of fiscal year 2025 and for fiscal years 2026 through 2029. State law requires the City to hold independent revenue conferences in September and February each fiscal year to set the total amount available for its annual budget and four-year financial plan.
Revenue outlook continues to improve
The Detroit Economic Outlook for 2023-2029, released Friday, predicts the City’s economy will continue to see steady growth, along with higher wages and a growing labor force. The forecast is prepared by the City of Detroit University Economic Analysis Partnership, which is a collaboration of economic researchers from the City, Wayne State University, Michigan State University, and the Research Seminar in Quantitative Economics (RSQE) at the University of Michigan.
The City’s revenue outlook is also steadily improving as income tax growth continues along with City efforts to spur economic opportunity and growth for Detroiters. For the September Revenue Conference, participants have revised revenue estimates for the recurring General Fund moderately upward to $52.3 million for the 2024 – 2025 fiscal year based on stronger internet gaming activity, continued economic growth, and State revenue sharing increases. Sustained growth in income taxes continue to lead revenue growth in future years, in line with the Detroit economic forecast.
“The moderate steady growth projected for Detroit’s economy is reflected in the growth in our revised revenue forecast. Our focus will continue, as in prior years, to assure fiscal stability through balanced budgets that protect Detroit’s ability to fund its obligations while further improving the quality of life for Detroiters,” said Jay Rising, Chief Financial Officer, City of Detroit.
Forecast: payroll jobs, number of employed residents grow while Detroit wages outpace the State
According to the outlook, the City’s economy will continue to improve with steady growth in payroll jobs, wages and the labor force. “We expect our forecast of continued employment growth, falling unemployment, and a return to growing real incomes to translate into ongoing, if gradual, progress toward more inclusive prosperity for Detroit residents over the next five years,” said Gabriel Ehrlich, Director, University of Michigan Research Seminar in Quantitative Economics and lead author of the forecast.
The RSQE report also stated “wage growth adjusted for Detroit CPI (Consumer Price Index) inflation averages 1.0 percent per year from 2024 to 2029 at Detroit establishments, while wage growth for employed Detroiters averages 1.4 percent per year. Both of those rates outpace the real wage growth we are forecasting statewide, which averages 0.6 percent per year in that time.”
Additional highlights in the forecast:
The forecast predicted positive developments for Detroit households earning less than $55,301 noting “our analysis found that the economic fortunes of Detroit’s households improved from 2018 to 2022. The share of residents living in lower-income households edged down slightly, while the economic circumstances of Detroit’s children improved more quickly than nationwide.”
These improvements come after investments which the Duggan administration in partnership with City Council have made over the past several years, creating programs like Learn to Earn, Skills for Life and more recently JumpStart, all of which combined offer education, career and job training skills that lead to higher-wage jobs for Detroiters.
Revenue Estimating Conference Results
The Revenue Conference reported FY2025 General Fund recurring revenues projected at $1.38 billion for the current fiscal year ending June 30, 2025, up nearly $53 million (3.9%) from the previous conference estimate in February 2024. The increase is driven by our growing income and property tax base and increases in internet gaming activity. The FY2025 revenue estimates also include an additional $30.7 million of non-recurring revenues, primarily from short-term investment earnings.
General Fund recurring revenues for FY2026, which begins July 1, 2025, are forecasted at $1.41 billion, an increase of $54 million (4%) over the previous conference estimate in February 2024. The projected increase is led by income taxes and wagering taxes. The out-year forecasts for FY2027 through FY2029 show continued overall revenue growth of about 2% per year.
The City will use the estimates approved today to begin developing the City’s FY2026 Budget and FY2026 through FY2029 Four-Year Financial Plan. The conference will meet again to approve revised revenue estimates in February 2025. The voting conference principals are Jay B. Rising, the City’s Chief Financial Officer; Eric Bussis, Chief Economist, Director, Office of Revenue and Tax Analysis, Michigan Department of Treasury; and George A. Fulton, PhD, Director Emeritus, Research Professor Emeritus, Research Seminar in Quantitative Economics (RSQE), Department of Economics, University of Michigan.
