How much federal money already goes to Detroit?

By Cate Long
August 2, 2013

 

Members of the House of Representatives are trying to gather support from other members of Congress to hold hearings on a federal fund to help Detroit through its bankruptcy.

As I have been saying for months, the likelihood of a federal bailout for Detroit is miniscule. Federal spending, excluding transfer payments like Social Security, Medicare and Medicaid, has been shrinking as a percentage of the U.S. GDP. The federal government’s discretionary spending is contracting. Moreover, it is difficult to find the political will to rebuild Detroit. Federal money is spent on sudden, massive disasters like Hurricane Sandy, not on a slow crash like Detroit.

The likelihood of a federal bailout for Detroit is small to none, but there is a discussion about the funds that the federal government sends to Detroit on an annual basis. This has been a form of life support for the city. The question is how much Detroit already receives from the federal government.

Bloomberg wrote:

President Barack Obama proposed giving Colombia about $323 million in aid next year, mostly to combat drug trafficking and violence. Detroit, with an 81 percent higher homicide rate, will get $108.2 million.

It’s an interesting comparison, but after studying Detroit’s financials, this number looked odd to me. Here are Detroit’s revenues from its 2012 Comprehensive Annual Financial Report (CAFR) page 47. Detroit received $253 million of federal funds last year. The “General Fund” (the main house account of the city) received $61 million, and “Other Governmental Funds” received $192 million. This would be about 16 percent of the $1.5 billion of total city revenues.

Detroit is already getting significant federal funds. It’s very important that Detroit get a better handle on its use of federal money. That alone could provide a boost to the city. Especially since the likelihood of additional federal money is low.

Chart: Federal Reserve Bank of St. Louis

3 comments

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Nothing can be done without severely hitting the Public Unions. Detroit’s Pension system and number of Public Employee’s is the biggest use of the cities ongoing debt. There are crap public sector jobs like basically typist and trash collectors making over $20 an hour plus benefits. What should be low end jobs that don’t take a college degree are making more then some college degree skilled jobs just because public sector. Now that IS an issue.

Posted by Syanis | Report as abusive

Just as we have ghost towns out west today, we have the ability to create and perhaps already have ghost towns or cities today.

Posted by my2sons | Report as abusive

The city receives about $290 million annually in 71 different grants — from community development block grants to Justice Department funding for police. Nowling noted the city at various times has misspent grant funding or been out of compliance with grant requirements. The group also would help ensure the city is in compliance with all grant requirements…

The city also is trying to determine how much grant funding is unspent. Nowling said there are reports that some grants with 15 to 25 percent of funds unspent. Levin told Orr he wants to work with him to “identify ways to look for federal funding through individual programs,” Nowling said.

From The Detroit News: http://www.detroitnews.com/article/20130 813/METRO01/308130020

Posted by Cate_Long | Report as abusive