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Detroit mayor proposes layoffs, leases in budget

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CHICAGO (Reuters) - Detroit would slash jobs and possibly lease some of its assets under a fiscal 2010 budget proposed by Mayor Kenneth Cockrel Jr. on Monday.

“This budget moves the city away from the pattern of deficit spending that has been tolerated for far too long, and introduces a new level of accountability and transparency to the city’s budget,” the mayor told the city council.

Cockrel called for eliminating 826 jobs, including 509 currently vacant positions, to save $42 million. He also proposed an early retirement program to reduce involuntary layoffs. The program is aimed at workers with more than 30 years of service and offers one-time retirement incentives.

The $3.6 billion spending plan for the fiscal year that begins July 1 also includes a plan the mayor unveiled in January to tackle a projected $300 million accumulated deficit.

Cockrel said that since January his administration has explored deals to lease city assets to private entities, adding that leasing income streams could result in $100 million from the Detroit-Windsor Tunnel, $100 million from municipal parking and $75 million from public lighting.

“The importance of this funding source is that it will reestablish the city’s cash reserves and thereby eliminate the need for the city to borrow each year to fund its annual operations,” the mayor said, adding the lease deals would also substantially reduce the deficit.

As for revenue, the mayor said his budget projects a $66.2 million drop in taxes, interest, fines, investment income and state revenue sharing. He added the budget, which includes nearly $1.6 billion in general fund spending, does not rely on any federal stimulus funds.

Reporting by Karen Pierog; Editing by James Dalgleish