Dearborn City Council Approves First Hammoud Administration Budget by 6-1 Vote

8 June, 2022
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Dearborn City Council Approves First Hammoud Administration Budget by 6-1 Vote

DEARBORN, MI — The seven-member Dearborn City Council voted 6-1 late on Tuesday to pass Mayor Abdullah H. Hammoud’s first budget proposal as mayor. 

 

The $128 million budget, which takes effect on July 1, reduces the city’s $22 million structural deficit by roughly $20 million—a 90% reduction—paving the path to structural balance by the administration’s second year. The administration inherited the shortfall after voters declined to renew the city’s supplemental operating millage last November. 

 

A structural deficit occurs when ongoing spending exceeds ongoing revenue, as opposed to one-off or short-term factors. The city has not passed a structurally balanced budget in nearly 20 years, and has often used one-time funds, or the city’s savings, to close annual budget gaps. 

 

“With so many challenges ahead, we approached this budget process with meticulous attention, but more importantly, compassion and care,” Hammoud stated, noting that the proposal had to balance the needs of active employees, retirees, and the city’s 110,000 residents. “In the end, we offered a path forward that resulted in no layoffs, no service cuts, and the long-term preservation of retiree benefits.” 

 

New investments

 

The budget includes several new investments that address longstanding needs of city residents. It provides funding for the first-ever comprehensive study of Dearborn’s water and sewage infrastructure, geared specifically towards flood mitigation. The study will also provide a roadmap for the full greening of the city to better manage storm runoff and intense rainfalls. 

 

It also provides for significant investment in parks and recreation, including free pool entry for Dearborn children 13 and under, three new soccer fields, basketball and tennis courts, splash pads, and other long-deferred improvements. 

 

To address the city’s growing rat problem, the budget includes an expanded vector control program designed to curb rat population growth citywide. 

 

The budget also allocates funding for traffic engineering measures to address speeding and hazardous driving, a top concern of city residents. These measures include speed humps, radar signs, and the  reengineering and redesign of streets to facilitate safe road conditions for drivers, cyclists, and pedestrians. 

 

Retiree Healthcare

 

A major topic of discussion was the proposed change to the design of retiree healthcare, a benefit the city stopped offering in 2012. The new budget includes deductibles of $250 for post-Medicare retirees, and $500 for pre-Medicare retirees under 65, while other retiree plans remain unaffected. Previously, retiree deductibles ranged between $0 – $250. The administration also pre-funded the deductibles for the first two years through new Healthcare Reimbursement Arrangements (HRAs) and created a hardship provision that exempts anyone who cannot afford the changes based on their income. 

 

By the time of Hammoud’s inauguration in January, the city’s retiree healthcare benefit, also known as OPEB, faced the risk of insolvency after years of inadequate funding. Since 2007, the city underfunded retiree healthcare by approximately $60 million, failing to make the actuarially-recommended payment to the OPEB fund in nine out of the last ten years

 

“These changes are about preserving this benefit for the long-haul, not just for current employees but also those who have yet to retire,” Hammoud added. “We need not look far to imagine where we were headed before. With the support of the City Council, we can now imagine a more certain future for this benefit and for the city more broadly.” 

 

In the budget, Hammoud also amended his own health plan and that of his senior staff to a $2,000 deductible plan for individuals. 

 

A Long Road 

 

The adopted budget is the culmination of a months-long process that included 7 weeks of budget presentations; hundreds of pages of detailed documents; at least 200 city council requests for information; three public budget town halls held at each of the city’s public high schools and live-streamed Facebook, a public town hall with retirees, and countless meetings and phone calls with budget stakeholders. 

 

“This is not something anyone can do alone. I’m grateful for the support, input, and vigorous debate offered by our City Council to move this budget and our city forward,” Hammoud said. 

 

All documents and information for the Fiscal Year 2023 budget can be found at www.cityofdearborn.org.


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